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Short-term bitcoin holders hit all-time low, how does this affect the price

Bitcoin has been performing well in the market lately. The digital asset broke the $50K price point earlier this week before a slight retracement dipped to $49K. This has been driven by several factors in the market. Growing interest tops the list. As the price rises, a lot of interesting things are happening in the bitcoin space, from holding patterns to holding durations.

Recent data shows that the number of short-term bitcoin holders has declined and hit new lows. Most investors are now only holding their coins and not taking them out of their wallets. This is happening regardless of where the price of BTC is at any given time. A record nearly 84% of the total bitcoin supply hasn’t moved in three months. This timeline coincides with the end of the previous bull rally, in which the asset saw a new all-time hit in the current rally.

Related Reading | South African man loses $900,000 worth of bitcoin after accidentally deleting keys

Investors taking bitcoin off exchanges

A bull rally that usually leads to an accelerated rate of sell-off is now having the opposite effect. Instead of investors selling their coins and taking profits when the price rises, the data shows that investors are hoarding their coins. This is evident in the inflows and outflows from cryptocurrency exchanges.

Related Reading | The Crypto Market Goes Into “Extreme Greed”, What This Means for Bitcoin

Increasing buying pressure is now the order of the day as long-term holders refuse to transfer any of their bitcoin holdings. With barely more than 80% of the total supply being moved, the demand has now exceeded the supply in the market, causing the BTC price to rise. The pattern of accumulation shows that long-term holders are only taking shares from short-term holders to add to their reserves.

Chart showing the small number of short-term bitcoin holders

Short-term BTC holders are down | Source: Twitter

This is leading to a decline in digital assets, which will continue to increase buying pressure if the selling pressure subsides. The outflow from crypto exchanges shows that investors are hoarding and consolidating their BTC holdings for the long term.

The tides are changing, and the hands are changing too

The past few years have seen bitcoin investors change their investment strategy in the market. Earlier, the dominant investment pattern was to buy the asset, hold it for a while, then sell during a bull rally. This has been happening in the last rallies. After a bull market these patterns always plunge the market into a long bear market.

Bitcoin Price Chart from TradingView.comBitcoin Price Chart from TradingView.com

BTC price corrects down below $50K | Source: BTCUSD on TradingView.com

But as the market has evolved, investors are evolving with it. BTC no longer has the potential to make short-term gains. Instead, coins are being held for a longer period. The growth of Bitcoin over the past few years has shown that the asset is still in its early stages of development. So digital assets are likely to have huge gains in the next few years.

The number of weak hands in crypto is decreasing day by day. More investors are turning to holding for the long term. Bitcoin now has more diamonds in the market than weak hands.

Featured image from USA Today, chart from TradingView.com

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