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Bitcoin Long-Term Holders in Profit as Price Hits New Highs

Bitcoin (BTC) has reached a new all-time high of $69,000 on November, 2021, amid a strong rally driven by institutional and retail demand. As the price of the leading cryptocurrency surges, the majority of long-term holders (LTH) are enjoying significant profits on their investments.

According to Glassnode, a blockchain analytics firm, the total volume of Bitcoin LTH supply held in loss is currently 777.8k BTC, and is trending towards the zero bound as prices rise. Just 6.5% of the aggregate LTH supply is therefore held in loss.

Glassnode defines LTH as entities that have held their coins for more than 155 days, and STH as entities that have held their coins for less than 155 days. The firm uses a logistic function to assign a weighting factor to each entity’s balance based on the time since the (averaged) purchasing date.

The chart below shows the historical correlation between the supply of Bitcoin held by LTH and STH. It reveals that LTH tend to accumulate and hold during market downturns and distribute during market uptrends, while STH tend to do the opposite.

Bitcoin: Long Term Holder Supply In Profit/Loss | Source: Glassnode

The chart also shows that the LTH supply reached an all-time high in mid-October, just before the new price peak. This indicates that LTH have been buying and holding Bitcoin throughout the year, despite the volatility and uncertainty in the market.

Glassnode notes that previous instances where the LTH cohort held a similar coin volume in loss corresponds with early bull market conditions (with 2019 as an arguable outlier). This suggests that the current market cycle is still in its early stages, and that LTH are confident in the long-term value proposition of Bitcoin.

The divergence between the LTH and STH supply shock ratios reflects the different behaviors and expectations of the two investor types. While LTH are betting on the long-term growth and adoption of Bitcoin, STH are looking for short-term gains and opportunities. The interplay between these two forces creates the dynamics and cycles of the Bitcoin market.

As Bitcoin continues to break new records and attract more attention, it remains to be seen how long LTH will hold on to their coins, and how much STH will sell their coins. The balance between these two factors will determine the future direction and momentum of the Bitcoin price.

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