A Growth In Short-Term BTC Holdings Signals A “Final Flush” Of Sellers

A growth in short-term BTC holding signals a “final flush” of sellers, suggesting that the capitulation events have concluded and the market is now set for a period of accumulation.

Since the disastrous Terra collapse in May, according to the most recent “The Week On Chain” report from market research firm Glassnode, short-term holders (STHs) have increased their holdings by 330,000 BTC. They may so serve as the canary in the mine, indicating the direction of a market rebound.

A Growth In Short-Term BTC Holdings Signals A “Final Flush” Of Sellers

Short-term Bitcoin holders started a new trend by purchasing extremely inexpensive coins at or around $20,000 during the large sell-offs that began in May through June, putting them in an “advantageous financial position.”

After a dramatic capitulation event, the ownership structure of #Bitcoin has been reshaped.

As markets sell-off, $BTC migrates from weaker hands, to those stepping in at the lows. Here, we explore how to track this migration of coins using age bands.https://t.co/xBxdvALRmZ

— glassnode (@glassnode) August 15, 2022

According to the analysis, exchange net outflows since May and an outflow of roughly 200,000 coins from long-term holders (LTHs) appears to have been the major causes of the rising STH supply. All of these things point to a capitulation, and STHs stepped in during the flush-out, and now possess coins with a substantially reduced cost base, according to the report.

Wallets that have only held Bitcoin for less than 154 days are known as STHs. They reach LTH status at 155 days.

Since extreme STH accumulation is typically contemporaneous with bull market topping forms, STHs typically buy coins at or close to all-time high prices and sell them for significantly less. Glassnode said that this tendency was being defied by purchasers from May and June, who produced a “constructive divergence.”

“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.

Whether the new STHs from May and June have the conviction to hang on and contribute to future price hikes is the next part of a market reversal that experts must consider, according to Glassnode.

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Today, Bitcoin was trading at a little over $24,000 and briefly surpassed this mark, after slipping from a price point of something over $25,000, a few days ago.

The latest look at the price of Bitcoin would suggest that the king coin is currently gravitating around the $24,000 mark, as before, but with a small, but noticeable downward trend.