Bitcoin is moving from long-term holders to new buyers.
Original title: “Glassnode 丨 At what stage of the bull market is it currently?” 》
Written by: CHECKMATE
Translation: Li Hanbo
As traditional financial giants Morgan Stanley and Visa announced further adoption of Bitcoin, the Bitcoin market continued to consolidate between US$53,600 and US$61,500. Morgan Stanley has launched three Bitcoin investment tools that can be used by its high-net-worth clients and investment companies. Visa is also following the pace of MasterCard, realizing bitcoin purchases through the Visa network.
Bitcoin is getting people’s attention at a faster and faster rate.
Small holders
Since March 2018, the proportion of Bitcoin addresses holding 1 BTC or less has continued to increase. Three years ago, small holders held 3.97% of the supply, and since then it has increased by 1.23%. This brings their current ownership share to 5.20% of all mined BTC.
The continuous accumulation of small holders shows that from mid-2018 to 2020, this trend has not been interrupted, and they are willing to hold through volatility . We have also seen that after the Black Thursday sell-off in March 2020, 0.1 to 1 BTC holders will immediately inflate.
Although there was a small degree of expenditure in the rebound of up to 42,000 US dollars, the holdings of small holders have returned to historical highs.
Real-time map of relative address supply distribution
Whale wallet remains stable
Interestingly, although we continue to see the accumulation of small holders, the net worth of larger wallet holdings (>100BTC) has been relatively stable over the past three years . The figure below shows the supply held by addresses of 100 BTC or above. In total, this group currently holds 62.62% of the BTC supply, and in the past 12 months, their total has increased by 0.87%.
Real-time map of relative address supply distribution
These large wallet balances have also been shuffled in denominations, possibly because they are held as custodian agents. Since December 2020 approached the US$20,000 ATH in the previous cycle, we have seen roughly equal and opposite changes in the balances of larger holders.
-
The holdings of 0 to 100 BTC have decreased by -56,000 BTC.
-
10 to 1,000 BTC increased holdings of +310,000 BTC.
-
From 1,000 to 10,000 BTC, the holding was reduced by -37,000 BTC.
Among these groups, we saw a slight decrease in net worth, reducing 32,000 BTC, which is only 0.24% of the total supply held by this group.
At the same time, our small holders have accumulated 29,800 BTC at the same time, which shows that BTC is gradually transferring .
Real-time graph of supply comparison by address
Holder cycle behavior
The reserve risk indicator is an advanced cyclical indicator that tracks the beliefs of holders in the cycle . The general principles of reserve risk are as follows.
-
Every coin that has not been spent will accumulate coin days, which is a measure of how long it is dormant. This is a good tool to measure the beliefs of the holder .
-
As prices rise, the incentive to sell and realize these profits will increase. Therefore, we usually see holders selling their coins as the bull market progresses .
-
Firm holders will resist the temptation to sell, and this collective action accumulates an “opportunity cost.” Every day, the holder actively decides not to sell, which will increase the accumulated unspent “opportunity cost”.
-
The reserve risk is the ratio between the current price (sell motivation) and the accumulated “opportunity cost” (HODL). In other words, reserve risk compares the motivation to sell with the beliefs of holders who resist temptation .
The figure below shows the reserve risk shock indicator. The current value is 0.008, and periods higher than this value in the past are highlighted in blue. Past cycle tops usually occur at values greater than 0.02 .
As prices rise and/or more holders spend their bitcoins, reserve risk will increase. This represents the “wealth transfer” of BTC, from long-term holders to new buyers .
Real-time map of reserve risk
Bitcoin wealth transfer
We can also look at the relative proportion of the supply held by long-term holders (LTH, blue) and short-term holders (STH, red); and divide the coins into profitable (deep) Color) or loss (light color). Please note that the chart below shows the ratio of profitable or loss-making circulating supply.
Bull markets generally follow a similar “wealth transfer” path in three different stages . We can use these fractal graphs to estimate our position in this cycle as a supplement to reserve risk indicators.
Stage A-the most painful: In the depths of the bear market, the largest cross-section of BTC holders is at a loss (the thickest light-colored area). LTHs began to accumulate around half of the bear market (instant losses), as shown by the growing light blue area.
In Phase A, only 40% to 45% of LTH coins are profitable , which represents the greatest pain until bottoming occurs.
The supply situation of long-term and short-term shareholders in profit and loss
Stage B-Bull market stage: With the development of the bull market, higher prices create greater temptation for holders to sell . At a certain stage, we encountered an inflection point where the largest percentage of LTH-owned coins was profitable. Generally speaking, this corresponds to a breakthrough of the previous cycle ATH.
After this stage, we see that long-term holders are profiting faster than new holders come in.
With each new cycle, we see more supply locked in by LTHs. This reflects the strength of the market, the increase in beliefs, the maturity of asset classes, the tools available to obtain liquidity, and of course the exponential growth of prices and the generation of wealth.
-
Peak holdings in 2011 = 55% of supply.
-
Peak holdings in 2013 = 65% of supply.
-
Peak potential holdings in 2021 = 75% of supply.
The supply of long-term and short-term currency holders in profit and loss
Phase C-the top of the cycle . Eventually, the market reached an exciting top because more LTHs spent their coins after the peak inflection point. This represents the “wealth transfer” event of BTC, from LTHs to new speculators, and reactivation of dormant supply back into circulation.
We can estimate the supply ratio of LTHs spent in the last period of the bull market by taking the difference between the same indicator measured at the bull market stage and the peak.
This can be seen as the reactivation supply required for “topping” .
-
Top of 2011: LTHs reactivated ~12% of the supply.
-
Top of 2013: LHs reactivated about 12% of the supply. Top of 2013: The reactivated supply of LTHs accounted for approximately 10% of the two peaks.
-
Top of 2017: LTHs reactivated about 17% of the supply.
-
2021 current. So far, LTHs have reactivated 9% of the supply.
Long-term and short-term currency holders’ profit and loss supply situation chart
Similar to reserve risk indicators, these studies show that conditions are similar to the latter half or late stage of a bull market . There is still a relatively large portion of the supply still held by LTHs, which is currently only spent 9%.
Before the peak in 2017, the amount spent on the supply was almost doubled (17%), which reflects a large number of new interests and an increased audience. As Bitcoin’s exposure and adoption rates continue to grow, and the debate over the super cycle continues, this BTC “wealth transfer” is another point of concern.
Disclaimer: As a blockchain information platform, the articles published on this site only represent the author’s personal views, and have nothing to do with the position of ChainNews. The information, opinions, etc. in the article are for reference only, and are not intended as or regarded as actual investment advice.
WWW.BLOCKCAST.CC 