Bitcoin had an unusually turbulent weekend, breaking from its typical weekend calm. On Saturday, January 31st, the leading cryptocurrency led a market-wide downturn, with its price plunging from $84,350 to as low as $75,000 in a single move.
Beneath this price action, a significant shift is occurring among holders. Recent on-chain analysis reveals that Bitcoin’s long-term holders are behaving differently than its short-term holders.
Long-Term Holders Accumulate as Short-Term Supply Shrinks
Pseudonymous on-chain analyst Darkfost noted in a CryptoQuant Quicktake post that Bitcoin’s long-term holders are accumulating more BTC. This is tracked by the LTH supply change metric, which measures the net change in Bitcoin held by long-term holders—typically coins that haven’t moved for about 155 days.
The analysis shows that approximately 186,000 BTC (on a monthly average) have been added to the long-term holders’ supply. As more coins age past the 155-day threshold, it implies a corresponding steady contraction in the supply held by short-term holders. Darkfost pointed out that this kind of transition between long-term and short-term investors last occurred in April, during a price retracement.
A rising LTH supply generally signals growing conviction among Bitcoin’s long-term investors, meaning they are distributing less and holding more. In theory, this is bullish for Bitcoin, as long-term holders absorbing supply reduces the amount of Bitcoin available for sale. Historically, this pattern has often appeared during early accumulation phases or late in correction periods, signaling potential price strength.
However, the current broader market context may not be as favorable. Darkfost highlighted that there is very weak demand to cushion Bitcoin’s falling price. Simultaneously, the market appears to be entering a bearish phase, making significant capitulation events a near-term possibility. If this occurs, the Bitcoin price could plummet as weaker investors sell off holdings out of fear or due to liquidations.
For a truly bullish outlook to materialize, a clear recovery in market demand must accompany the continued accumulation by long-term holders.
Bitcoin Price at a Glance
At the time of writing, Bitcoin is trading at approximately $78,060, reflecting a 6.9% loss over the past 24 hours.
Frequently Asked Questions
FAQs Bitcoin LongTerm Holder Supply Increase During Market Downturn
Beginner Questions
What does longterm holder supply mean
It refers to the total amount of Bitcoin held in wallets that havent moved their coins for a long time These holders are often seen as committed investors who arent selling quickly
Why is it significant that this supply is increasing now
It suggests that despite falling prices many investors are choosing to hold onto their Bitcoin rather than sell This can be a sign of strong longterm confidence even during a market dip
Isnt it bad if the price is going down Why would holders not sell
Not necessarily Many longterm holders believe in Bitcoins value over years or decades not days or weeks They often see price dips as buying opportunities or simply irrelevant to their longterm strategy
How do we know this supply is increasing
Blockchain analysts track wallet activity When coins dont move from addresses for extended periods they are added to metrics that measure illiquid or longterm holder supply
Intermediate Market Dynamics Questions
What does this trend tell us about current market sentiment
It often indicates a divergence shortterm traders and weak hands may be selling while committed investors are accumulating or holding firm This can signal that the market is in a phase of consolidation or accumulation
Couldnt this just be coins lost in old wallets
While some lost coins are included the recent active increase in this metric during a downturn is more likely attributed to deliberate holding by investors choosing not to sell at current prices
Does this mean the price will stop falling soon
Not directly While it can indicate underlying strength and reduce immediate selling pressure it doesnt guarantee a shortterm price bottom Other factors like macroeconomic conditions and market liquidity still play major roles
Are longterm holders always right
Historically their behavior has often preceded major market rallies as their accumulation reduces available supply However past performance doesnt guarantee future results and their conviction is tested most during severe downturns
Advanced Strategic Questions
How does an increasing longterm supply impact Bitcoins economics
It reduces the liquid supply available for trading on exchanges This can increase volatility if demand suddenly spikes and can contribute to a stronger price foundation over