On-Chain Data Reveals Bitcoin Holders’ Impact on Market Cycles

By 0xGorki On May 3, 2023

Bitcoin holders and market cycles are often interrelated, and understanding this interplay is essential for investors and traders alike. On-chain data shows that the supply of bitcoins held by investors between 18 months and 2 years usually expands as the price of Bitcoin forms a base and then surges when the bottom is reached.

At present, the data indicates that Bitcoin’s price has hit its lowest point, and the holdings of short-term Bitcoin holders (less than six months old) are growing as prices move upwards. These short-term holders are accumulating coins after the lowest price point and continue to do so as the price increases, leading to a rise in the MVRV ratio.

However, it is noteworthy that the market peak will coincide with short-term holdings exceeding 6 million Bitcoins, and this figure currently stands at 4.7 million. Therefore, it remains to be seen how much further the price of Bitcoin will rise and whether short-term holders will continue accumulating coins at the current rate.

In contrast, the holdings of long-term Bitcoin holders who have not moved their coins for a year or more (1-year inactive supply) achieved a record high in late March, and the trend is continuing with 13.0 million bitcoins currently held. The 1-year inactive supply typically grows throughout most of the bull cycle and only starts to decrease during the bull market’s final stage.

The interplay between Bitcoin holders and market cycles is a critical factor in determining the future price of Bitcoin. The current data suggests that the market cycle is in an upward trajectory, with short-term holders accumulating coins as prices increase. However, the future remains uncertain, and investors and traders should keep a close eye on the interplay between Bitcoin holders and market cycles to make informed decisions.

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