Number of short-term BTC holders soars

16 Aug 2022

A recent increase in short-term Bitcoin holders may indicate a “final flush” of sellers, leaving the market prepared for months of accumulation.

According to findings from The Week On Chain report, compiled by market analysis company Glassnode on Monday, short-term holders (STHs) have increased their holdings by 330,000 BTC since the collapse of LUNA back in May. Consequently, this may signal the road to market recovery, Cointelegraph reports.

Within the sell-offs taking place in May and June, short-term holders of the world’s largest cryptocurrency set a new trend by purchasing cheap coins at $20,000 or below, placing them in an “advantageous financial position.”

The report states that, since May, an outflow of 200,000 coins from long-term holders (LTHs) as well as exchange net outflows, looks to have been the principal factors contributing to the increasing STH supply. Combined, these events show proof of a capitulation and that STHs “stepped in during the flush out, and now own coins with a much lower cost basis.”

Short-term holders are wallets holding Bitcoin for no longer than 154 days, turning into long-term holders after 155 days.

Short-term holders usually purchase Bitcoin at or close to record high prices and sell far lower because “extreme STH accumulation is normally concurrent with bull market topping formations.” That said, according to Glassnode, buyers within May and June created a “constructive divergence” in bucking that trend, the Cointelegraph report adds.

“Such events describe a transfer of coins to new buyers whom are initially classed as STHs, but have a low cost basis, but are in an advantageous financial position to HODL from there on," the report stated.

Glassnode said the next phase of a market turnaround that should be reviewed by analysts is whether the new short-term holders from May and June “have the conviction to hold on” and contribute to additional price hikes. 
 

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