During a bullish period in the cryptocurrency market, it is common for long-term holders (LTHs) to sell their Bitcoin as prices rise. This trend was particularly noticeable from early 2024 until April. According to CryptoQuant, the supply of 1-year and 2-year old unspent transaction outputs (UTXOs) experienced significant declines. However, despite the selling pressure on these UTXOs, the supply of Bitcoin in UTXOs older than three years continues to grow. This indicates that long-term holders have a heightened sense of optimism for the future.
In bullish phases, it is typical for LTHs to sell a portion of their Bitcoin holdings as prices increase. However, recent data suggests a shift in behavior among long-term holders. The 1-year+ and 2-year+ cohorts have stopped selling and have transitioned from a distribution phase to a holding phase. This change in behavior is a positive sign for the long-term confidence in Bitcoin.
It is worth noting that over 50% of the total Bitcoin supply has been inactive on-chain for over a year. This indicates that a significant portion of Bitcoin holders have faith in the long-term value of the cryptocurrency and choose to hold onto it instead of selling during market fluctuations. This behavior suggests a belief in the continuous growth of Bitcoin’s worth over time.
Despite a recent drop in price to $56k, Bitcoin is now recovering its value. This has led to a change in behavior among long-term holders. Those who have held Bitcoin for at least one or two years are no longer selling their holdings. This shift from distribution to accumulation indicates a renewed trust in the future price of BTC. These holders prefer to keep their assets rather than converting them into cash at the current rates.
The current technical outlook for Bitcoin is crucial. Prices are testing key support levels, and the behavior of long-term holders and other on-chain metrics indicate strong bullish sentiment. However, if the daily Ichimoku cloud is breached, market sentiment could reverse, leading to a retracement to $64k. Investors should closely monitor technical and on-chain indicators to make informed decisions in the coming weeks.
Ultimately, the activity of Bitcoin holders over an extended period provides insight into their sentiment towards this asset class. The fact that over half of all bitcoins have remained dormant for more than a year demonstrates faith in its long-term value. With critical support levels still being tested, the actions of these participants, along with key technical signals, will determine the direction of the market moving forward.
