How Long-Term Holders Sell Coins to Short-Term Holders and then Buy them Back: CryptoQuant

In the fast-paced world of cryptocurrency, understanding market dynamics is no easy task. However, a recent report from CryptoQuant sheds light on an intriguing phenomenon that has unfolded in the Bitcoin market during the first three quarters of this year. This phenomenon involves a strategic interplay between Long-Term Holders (LTHs) and Short-Term Holders (STHs) that has left many in the crypto community scratching their heads.

To put it succinctly, STHs have seen significant success in 2023, distributing a whopping 1.3 million BTC across the network, totaling a staggering $35 billion. But what makes this scenario truly remarkable is not just the volume of coins involved, but the peculiar way in which these coins changed hands.

Source: CryptoQuant

The realized capitalization of STHs has been on the rise since the start of the year, surging from $79 billion to a formidable $114 billion. In essence, this means that STHs not only purchased a substantial number of Bitcoins but also locked in considerable profits over the course of the year, leaving many wondering about the source of these sold coins.

Source: CryptoQuant

To unravel this enigma, we turn our attention to the BTC: STH LTH Net Position Realized Cap chart, where the weekly change in realized capitalization for the LTH cohort is depicted in blue. This chart provides a visual narrative of how LTHs strategically sold their Bitcoins to STHs, resulting in a fascinating pattern of distribution.

The chart unveils a distinct moment in April when the LTH cohort initiated a consistent sell-off, amounting to a remarkable $10 billion, all while Bitcoin was hovering around the 28.2K level. Simultaneously, STHs were actively accumulating these coins, setting the stage for an intricate financial chess match.

As the data on the first chart indicates, the STH cohort is currently experiencing a loss and is capitulating, meaning they are selling the coins previously acquired from LTHs. In a fascinating twist, LTHs are now seizing the opportunity to buy back their Bitcoins, effectively reversing the flow of assets in a market where timing is everything.

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