There are different types of analysts in the cryptocurrency market, and some of them keep an eye on the behavior of long-term and short-term investors. Short-term and long-term investors hold the number of bitcoins, and they are spread all across the globe. The amount of cryptocurrencies they hold depends on different types of things like the price of bitcoin and the prices that they can make.
BTC prices increase back whenever the price has gone down drastically. This time also, the same will happen. The bitcoin market has already reached the end of the accumulation phase. According to the data available in the past, it will be followed by a considerable increase in bitcoin prices.
Sales by long-term holders
First of all, it is needless to say that everyone needs to understand the LTH. What do we call a long-term holder for cryptocurrencies like bitcoin? Also, everyone must know about what we call the long-term hold a net position change indicator. Let us tell you that it is an indicator that measures the change in the bitcoin supply held by the long-term holders.
The people who hold bitcoins for at least 155 days or about five months are called long-term holders. We generally do not address these cryptocurrency holders by their names but by their wallet addresses. According to the historical data, there exists a negative correlation between the bitcoin prices and the LTH position indicator. Therefore, whenever large investors sell cryptocurrencies for long-term investment, the prices start to increase.
On the contrary, the opposite happens whenever the cryptocurrency long-term investors start to invest money in bitcoins. The prices start to decrease. It happens because the LTH sells their bitcoin value to the STH, who are short-term investors and do not keep the cryptocurrencies for a very long period in their wallets.
The short-term holders are the ones who purchase cryptocurrencies when the prices are lower and sell them when the prices are higher. On the contrary, the long-term holders of cryptocurrencies like bitcoin do precisely the opposite. They purchase the bitcoins when the prices are higher and sell them when the prices are lower. It may seem like the LTH is making huge losses, but that is not precisely the case.
After the 2021 April change, the long-term holder net change indicator showed a negative bar in November. At that time, bitcoin was standing at $64,800 and was moving towards the $70,000 mark. For more info, you can like the allin1bitcoins.com.
At this point, the correlation was in balance, but later on, things changed significantly. The correlation that followed the situation was a value of 55%, which led to a price drop to $29,000 in July. At that time, bitcoin started to get an LTH position on the green side, which meant that the cryptocurrency holders were buying the dips. As a result, they were purchased at the lowest prices in the year, which will make them properly in the future.
The current situation
At this point, the roles are reversed. The long-term holders of bitcoin are starting to sell their large amounts of bitcoins into the market. The same thing happened in mid-October 2022 for the last time when the bar of cryptocurrency holdings was turning from green to red. The bitcoin was about to break its resistance price of $12,500, which led to the exponential bull market phase release.
This phase was the best in the cryptocurrency market in history. Due to this action of the long-term Bitcoin holders, the bitcoin experienced an increase of 417% within just six months. Experts say there are barely any chances of experiencing such a high increase in the prices of any cryptocurrency shortly. Therefore, investing money in bitcoin is pretty a good option at this point.
Extreme liquidity
BTC is highly liquid in comparison to the other financial assets. It is because bitcoin remains in demand all the time, and there are buyers for cryptocurrencies all across the globe. Therefore, whenever you can sell something at any point in time, it gets value in the market. Also, the relationship is two-sided. Then something as well in the market, you will always find some buyer who is willing to pay the price you are willing to get. Hence, bitcoin is never going to get out of the market. Therefore, there is always a chance that bitcoin will make it up to investors’ expectations and reach the all-time high price of more than $75,000 soon.
