A recent spike in short-term BTC holders could signal a “final flush” of sellers, meaning the capitulation events have played out, leaving the market ready for months of accumulation. 

The latest The Week On Chain report from market analysis firm Glassnode on Aug. 15 points out that short-term holders (STHs) have expanded their holdings by 330,000 BTC since May’s catastrophic LUNA collapse. As a result, they may be the canary in the coal mine signaling the path to market recovery.

During the mass sell offs starting in May through June, Short-term holders of Bitcoin (BTC) established a new trend by buying up extremely cheap coins at or below $20,000 which puts them in an “advantageous financial position.”

The report states that an outflow of about 200,000 coins from long-term holders (LTHs) and exchange net outflows since May appear to have been the main contributors to the swelling STH supply. Altogether, these events indicate that a capitulation has occurred and that STHs “stepped in during the flush out, and now own coins with a much lower cost basis.”

STHs are defined as wallets that have held BTC for no more than 154 days. They become LTH at 155 days.

Typically, STHs buy coins at or near all-time high prices and selling much lower as “extreme STH accumulation is normally concurrent with bull market topping formations.” However Glassnode stated that buyers from May and June created a “constructive divergence” in bucking that trend.

“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," it added.

Glassnode suggests that the next aspect of a market turnaround that analysts must look at is whether the new STHs from May and June “have the conviction to hold on” and contribute to further price increases. 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Cryptos feed Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Circle announces cross-chain USDC payment support

Circle announces cross-chain USDC payment support

When it comes to cryptocurrencies, the first spot is fixed for Bitcoin. However, the struggle between the second and the rest of the cryptos continues. This case extends to stablecoins as well since USDC is finding takers even in the most unconventional cases.

More Cryptocurrencies news

Cardano price remains still after Vasil hard fork, what’s next?

Cardano price remains still after Vasil hard fork, what’s next?

Cardano price has remained neutral despite the blockchain undergoing a massive upgrade this week via the Vasil hard fork. This update is multi-faceted and brings a host of improvements to the so-called “Ethereum-killer”, including transaction throughput. 

More Cardano news

XRP Price Prediction: Trade against retail, you'll win every time

XRP Price Prediction: Trade against retail, you'll win every time

XRP price is showing applaudable retaliation signals. Since September 25, the bears have conquered the market, forging a 20% loss in market value for the digital remittance token. Invalidation of the bullish thesis is a breach of $0.31.

More Ripple news

Terra Luna Price Prediction: Why the call for a 10x bull run may have been made premature

Terra Luna Price Prediction: Why the call for a 10x bull run may have been made premature

Terra Luna's price may be headed lower than investors may be thinking. Tera's LUNA price could take investors by surprise in the coming days. Since August, the forecast was made that LUNA could potentially 10x in market value.

More Terra news

Bitcoin makes a bullish comeback amid regulatory tension, but lacks confirmation

Bitcoin makes a bullish comeback amid regulatory tension, but lacks confirmation

Bitcoin price takes the first step to recovery but needs solid confirmation that will arrive after a flip of the $19,539 level into a support floor. After a successful flip, investors could expect a move up to an intermediate hurdle at $20,737.

Read full analysis

BTC

ETH

XRP