Glassnode is an analytics company that uses on-chain data to analyze Bitcoin. They have explained how Bitcoin reaches a possible top if long-term owners show this behavior.
Bitcoins Long-Term holders are increasing their distribution
New research has revealed that the number of people who are using social media is increasing. Glassnode The influence of BTC’s long-term investors on supply dynamics was discussed. The study examined the influence that BTC long-term holders have on cryptocurrency’s supply dynamics. “long-term holders” LTHs are Bitcoin holders who have kept their bitcoins for more than 155.5 days.
LTHs is one of the main groups within the BTC community based upon holding time. “short-term holders” (STHs).
In the past, LTHs were the most persistent players on the market. It is not their style to sell quickly regardless of market conditions. STHs on the contrary, react often to events that cause FUD or FOMO.
The STHs are not uncommon to participate in the sale. The LTHs that are showing sustained distribution may be worth noting, because the selling of these HODLers who normally sit back and wait can impact the market.
Glassnode is one of many ways to track the behavior of LTHs. However, in this discussion, Glassnode used the “LTH Market Inflation Rate” metric.
According to the report:
The graph shows an annualized rate for Bitcoin distribution or accumulation by LTHs as compared to the daily mining issuance. This rate can be used to identify periods where the LTHs remove Bitcoin from the marketplace, or periods where they add pressure on the sell-side.
Here is the chart showing the BTC-LTH market inflation rate over the last few years.
Source:| Source: Glassnode
This chart includes data on the inflation rate for each asset. It is the value that miners introduce into circulation by solving blocks, and then receiving. rewards For them.
These HODLers accumulate amounts that are exactly the same as what miners issue when the LTH market inflation rate is 0%.
It is clear that if the indicator falls below the zero percent mark, the LTHs will be pulling out coins. However, if it rises above that level then the LTHs may either not buy enough or distribute the coin supply to cover the production of miners.
The graph shows historically that the crypto’s price tends to stabilize and even reach a maximum when LTH distribution is at its peak.
Although the LTH Market inflation rate has increased recently, it is still far from reaching any major levels. Glassnode explains what it could mean for market.
According to the current LTH market trend, we’re in the beginning of a cycle with only about 30% complete. The current market cycle is likely to be very active until the equilibrium of supply and demand and the potential top in price are reached.
BTC Price
Bitcoin’s price is now down to $63,800, having recovered most of the gains it made in recent days.
Source:| Source: BTCUSD on TradingView
Image courtesy of Unsplash.com and Glassnode.com. Chart from TradingView.com
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