An interesting metric posted by Glassnode yesterday measures the total supply of Bitcoin held by long-term holders versus short-term holders.
This metric can be used to get an idea of where we are in the market cycle. Long-term holders are usually accumulating first when prices are at the lower price end of the market cycle. Short-term holders enter as the Bitcoin hype starts to increase and generally later in the market cycle from fear of missing out on not being a part of a massive move in price.
Let’s take a look at the chart:
Using this chart from Glassnode founders, we can see that total supply of Bitcoin held by long-term holders has now crossed under total supply held by short-term holders. The last time this happened was back in July of 2017 at around $6000.
This gives us indication that the accumulation phase is nearing the end of this bull cycle and we’re now approaching the bigger uptrend/parabolic phase.
A question that is asked often is; what price will this cycle top out at? Obviously, that is impossible to know at this point. When we look at the last cycle from 2017, Bitcoin more than tripled from this particular crossing. If that repeated it would put Bitcoin at around $150,000.
As we know, not all cycles are the same. This one has its own unique outcomes such as public companies converting cash treasuries to Bitcoin and an obvious increase in institutional interest. These factors in combination with a massive herd of retail interest could compound considerably to push prices beyond our estimations.
Using this metric we can see that retail is not only coming but they are here and buying up supply. This trend is likely to continue throughout this year. Prepare for increased volatility and supply squeezes as Bitcoin moving off exchanges is at all-time highs.
Let’s connect on Twitter. Looking forward to hearing your thoughts and feedback.
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Resources I Use
I use Glassnode for all the metrics I track on the Bitcoin network. Their platform is extremely user friendly and fun to use.
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Coinsquare offers Bitcoin trading in Canadian dollars and is one of the top exchanges in Canada.
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Trading Alpha has built their own indicators that provide buy and sell signals for crypto and equities trading.
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