TL;DR
- There is a notable decline in Bitcoin supply among short-term holders, the lowest since 2012, while long-term holders are increasing their share.
- The lack of demand from short-term holders could be limiting BTC’s potential to break out of its current price range, affecting its ability to reach new all-time highs.
- Bitcoin has reached a market dominance of 54.9%, the highest since April 2021, and continues to solidify its reputation as a “safe haven” during times of volatility.
A recent analysis by CryptoQuant reveals a significant decrease in Bitcoin (BTC) supply among short-term holders, a trend not seen since 2012.
The reduction is due to a shift toward long-term holders, who typically hold their BTC for extended periods. The decrease in short-term holder supply may be limiting Bitcoin’s ability to break out of its current price range.
According to Julio Moreno, Head of Research at CryptoQuant, Bitcoin’s rally to new all-time highs is usually driven by new short-term holders buying BTC from long-term holders, driving up prices in the process. The lack of new demand from short-term holders could be restricting the potential for a price breakout.
Short-Term Holders’ Average Buy Price: A Key Indicator for #Bitcoin’s Next Move
“The yellow circles on the chart highlight areas where Bitcoin’s price either broke through or was supported by the average buy price of these 1-3 month STHs, leading to significant price increases.”… pic.twitter.com/uD2ZoaaJYG
— CryptoQuant.com (@cryptoquant_com) September 19, 2024
Meanwhile, Bitcoin’s market dominance has reached 54.9%, the highest level since April 2021. This increase has occurred amidst market volatility, highlighted by the August 5 sell-off triggered by a sudden rise in interest rates in Japan.
Bitcoin Continues to Strengthen Its Reputation as a “Safe Haven”
During this period, Bitcoin’s cumulative volume delta (CVD) on U.S. exchanges remained positive, while many altcoins experienced intense selling. This behavior reinforces BTC’s perception as a “safe haven” during economic uncertainty.
Additionally, the introduction of Bitcoin exchange-traded funds (ETFs) in the U.S. in January has further solidified BTC’s position as an attractive investment asset. These ETFs have attracted institutional capital, strengthening the leading cryptocurrency’s position compared to altcoins, which continue to face higher risk premiums and volatility.
The decrease in Bitcoin supply among short-term holders and the increase in its market dominance underscore the current dynamics of the cryptocurrency market, marking a period of adjustment in investment strategies and perceptions of BTC’s value relative to its competitors. As of this article’s writing, BTC is trading at $63,131, showing a 6.14% increase in the last 24 hours.
