Glassnode’s latest analysis suggests that Bitcoin has built a strong foundation below the $30,000 level, and the current supply structure shows similarities to early 2016 and early 2019.
The report shows that the Long-Term Holder (LTH) supply is just shy of a new all-time high with a total supply balance of 14.161 million BTC. In contrast, short-term holders (STH), who acquired coins after FTX failed, have seen their supply balance of 2.914 million BTC remain relatively constant in 2023.
Long-term holders are unfazed despite major downturns
By April 12, 155 days had passed since the FTX exchange collapsed on Nov. 8, 2022. The 155-day mark is crucial because it is the minimum length of time that a Bitcoin holder must have held their coins to be classified as a long-term holder (LTH).
Thus, the supply distribution can be divided into two halves, first, before FTX’s collapse to represent LTH supply and the other after, to represent short-term holders.
Bitcoin Long/Short-Term Holder Supply. Source: glassnode
The report also drew a comparison of previous market cycles based on LTH behavior expressed via changes in their supply. It noted that currently Bitcoin is experiencing a period of “Plateau of Patience”, where LTH supply tends to hover around its ATH, often from several months, to over a year.
It added that the supply structure also has similarities to early 2016 and early 2019. Notably, while Bitcoin’s price did not form new lows in 2016 and 2019, the actual bull run didn’t start for 18 to24 months in late 2020 and 2021. The period of parabolic rise usually witnesses a swift spike in the percentage of holdings on LTH in profit, followed by profit-taking.
Long-term and short-term holder supply in profit/loss. Source: glassnode
The year-to-date strength in Bitcoin’s price is supported by an “explosive uptick” in coins held at a profit. The report added that bear market floors are characterized by wide-scale capitulation which also sees “an equal and opposite inflow of demand to absorb it.”
Related: Bitcoin on-chain data highlights key similarities between the 2019 and 2023 BTC price rally
As price rallies out of the bottom formation zone, all of these coins return to profit. In 2023, a total of 6.2 million BTC returned to profit, representing 32.3% of supply, indicating a strong cost basis foundation of buyers below $30,000.
Bitcoin percent supply in profit. Source: glassnode
The long-term holder’s supply is a crucial factor to consider when analyzing the market and Glassnode highlights the importance of patience in a market cycle. Bitcoin’s current supply structure indicates that while a bull run may not arrive shortly, BTC is unlikely to visit prices below the $15,500 level.
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