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This metric for long-term Bitcoin holders is approaching the “bottom zone” of BTC price

Published on

September 22, 2022
Read Time:2 Minute, 46 Second

A Bitcoin (BTC) on-chain indicator that tracks the quantity of cash held by long-term holders (LTHs) on losses is signaling {that a} market backside could also be close to.

Eerily Correct Bitcoin Backside Pandit

As of September 22, about 30% of Bitcoin's LTHs had been going through losses BTC’s fall from $69,000 in November 2021 to around $19,000 now. That's about 3% to 5% below levels previously coinciding with Bitcoin's market bottoms.

For example, in March 2020, bitcoin price fell below $4,000 amid the COVID-19 induced market crash, which took place when the amount of BTC supply held by LTH at a loss surged to 35% as shown below.

Bitcoin long-term holder supply in losses. Source: Glassnode

Similarly, Bitcoin's December 2018 bottom of around $3,200 coincided with the LTH loss metric, which surged over 32%. In both cases, BTC/USD followed entry into a long bullish cycle.

Therefore, the number of LTHs that lose during a typical bear market tends to be in the 30% to 40% range. In other words, the price of bitcoin still has room for a decline – likely into the $10,000-$14,000 range – for “LTHs in Loss” to hit the historic low zone.

Coupled with the LTH supply metric, which tracks BTC supply held by long-term holders, it appears that these investors are accumulating and holding during market downturns and dumping during BTC price uptrends, as illustrated below.

Total bitcoin supply owned by LTH. Source: Glassnode

Therefore, the next bull market could begin when the total supply of LTHs starts to decline.

Bitcoin accumulation is strong

Meanwhile, the number of accumulation addresses has steadily increased during the current bear market data shows. The metric tracks addresses that "have not less than two incoming non-dust transfers and have by no means spent any cash."

Bitcoin variety of accumulation addresses. Supply: Glassnode

Apparently, this differs from earlier bear cycles the place the variety of accumulation addresses has decreased or remained flat as proven within the chart above, suggesting that hodlers are unfazed by present value ranges.

Moreover, the variety of addresses with a non-zero steadiness is round 42.7 million, up from 39.6 million earlier this yr, displaying constant consumer progress in a bear market.

Bitcoin rely of non-zero steadiness addresses. Supply: TradingView

BTC value technicals are suggesting additional draw back

Bitcoin continues to be struggling to reclaim $20,000 as assist in a better rate of interest surroundings. Its correlation with US shares additionally factors to additional draw back in 2022.

Associated: Bitcoin Analysts Give 3 Causes BTC Worth Beneath $20,000 Might Be a “Bear Entice”

From a technical perspective, Bitcoin may fall additional in the direction of $14,000 in 2022 if there's a cup and deal with collapse as proven beneath.

BTC/USD three day value chart with cup and deal with sample. Supply: TradingView

Such a transfer ought to shift the aforementioned “LTH at a loss” metric towards the 32% to 35% capitulation area, which may finally coincide with the underside within the present bear market.

The views and opinions expressed herein are solely these of the writer and don't essentially mirror the views of Cointelegraph.com. Each funding and buying and selling transfer includes threat, it's best to do your individual analysis when making a call.

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Azeez Mustafa
Azeez began his FinTech career path in 2008 after growing interest and intrigue about market wizards and how they managed to become victorious on the battlefield of the financial world. After a decade of learning, reading and training the ins and outs of the industry, he’s now a sought after trading professional, technical/currency analyst and funds manager – as well as an author.
Last Updated : September 22, 2022
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