Bitcoin On-Chain Analysis: Are We in an Accumulation or Distribution Phase?

Recent Bitcoin market volatility shows a clear divergence in holder behavior, according to on-chain data highlighted by analytics platform Glassnode.

A chart shared by the firm indicates Short-Term Holders (STH) – those holding Bitcoin for less than 155 days – are largely realizing losses on recent price moves. Conversely, Long-Term Holders (LTH) – holding for over 155 days – appear to be primarily securing profits when they transact.

STH Losses vs. LTH Profits: A Typical Cycle Dynamic?

This dynamic reflects the somewhat usual market cycle where newer investors face challenges, but veteran holders remain confident and often sell at a gain during price fluctuations. Historically, Long-Term Holders accumulate BTC during bear markets and begin offloading their holdings as prices rise, securing profits.

The information on the chart could mean that the Bitcoin market is in a holding pattern. Long-term owners’ profits are being matched by short-term owners’ losses. This translates to no capital coming in, fewer people buying, and while some are still selling for profit, it’s less than before.

This data aligns with past Bitcoin cycles, characterized by newer market participants who tend to panic-sell during downturns, while seasoned investors strategically exit at higher price levels. Depending on which way the profit goes, Bitcoin’s price and market stability might be affected. For instance, if Short-Term Holders continue selling at a loss, it may increase selling pressure and drive prices lower. On the other hand, if Bitcoin stabilizes or rises, it could restore confidence among these investors.

Market in Holding Pattern? Capital Inflows Reportedly Slow

Glassnote went further with the analysis, reporting that the demand side is waning. The research indicates a big reduction in new capital inflows into the Bitcoin network, evidenced by an 85% drop in combined realized profit and loss volumes, decreasing from $3.4 billion to $508 million since the all-time high of $109k.

Such a drop in activity mirrors the demand patterns observed during the 2024 accumulation phase when Bitcoin traded between $50k and $70k.​

Long-Term Holders Accumulate Again Despite Slowdown

Despite the challenging conditions, there is a notable trend of accumulation among Long-Term Holders. Their supply is beginning to grow once more, highlighting an investor preference for holding and accumulating Bitcoin.

All in all, if Bitcoin continues to trend upwards, Long-Term Holders may increase profit-taking, but this doesn’t necessarily mean a bearish market, since it still is a part of normal market cycles.

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