A recent analysis from CryptoQuant highlights the dynamics surrounding Bitcoin’s recent recovery, suggesting it may resemble a bear market rally rather than a strong bullish trend. The insights come from community analyst Maartunn, who detailed the nuances of on-chain metrics in a discussion on social media platform X.
After hitting a low earlier this year, Bitcoin entered a consolidation range which coincided with a substantial increase in the supply held by long-term holders (LTHs). These LTHs are defined as investors who have maintained their Bitcoin holdings for over 155 days. According to on-chain data, the bottoming process seemed to begin with a notable uptick in the LTH supply, indicating a shift as coins began transitioning into the hands of long-term investors.
For an extended period, the 30-day change in the LTH supply presented a negative trend, signaling that seasoned holders were distributing their assets. However, this trend reversed at the end of January, marking a significant turn in behavior as more coins began to accumulate within the LTH category. Historical data suggests that it takes 155 days for coins to officially be classified as part of the LTH supply, meaning recent accumulations may not immediately reflect current market conditions. Yet, the influx of 345,000 BTC into this cohort over the last month points to a growing conviction among long-term investors.
Despite this increased supply among LTHs, the analysis also revealed persistent selling pressure from short-term holders (STHs), defined as those who have held their Bitcoin for less than 155 days. These STHs have sent around 60,000 BTC to exchanges, which could be contributing to the downward momentum observed in Bitcoin’s price. Furthermore, many STHs are reportedly offloading their holdings at a loss, even during the recent price uptick, which underscores the ongoing market uncertainty.
The selling isn’t limited to STHs; larger entities holding over 100 BTC have also increased their outflows to exchanges, suggesting a broader trend of distribution that may be stifling Bitcoin’s price rally. This collective selling pressure has raised concerns about the sustainability of the recovery, leading Maartunn to conclude that the current uptrend still resembles a bear market rally.
Bitcoin surged past $78,000 last week but has since faced setbacks, retreating to approximately $75,300. As the market contemplates these dynamics, analysts remain cautiously optimistic, recognizing that a robust breakout could potentially shift the prevailing trend.
