Another strong week resulted in Bitcoin [BTC] climbing 20% from a low of $37,524 to $45,215. Despite the uptrend after a period of continuous consolidation, the accumulation mimicking the price action confirms underlying market strength.
As a matter of fact, blockchain intelligence platform, Glassnode highlighted that the accumulation trend is now mirroring that of 2019 and 2020, thereby depicting a constructive case for prices ahead. It stated,
“Average Coin Dormancy has returned to around 10-days, the same level as the period of accumulation throughout 2019 and 2020. This lifespan metric presents the average lifespan of spent coins on a per BTC spent basis. It provides further evidence that old hands are not taking exit liquidity at this stage.”
Bitcoin supply squeeze
Bitcoin supply squeeze assessment has been subjected to numerous debates and discussions of late. There has been a significant recovery of Long-term holder [LTH] owned tokens which is now slowly nearing a whopping $12.48 million BTC. This latest course reflected a similar trend that was witnessed in the volume of coins held by this same cohort of holders back in October 2020, right before Bitcoin went on a bullish streak.
According to Glassnode, this on-chain response broadly demonstrates the volume of coins accumulated in the first quarter of 2021 that remain tightly held and also projects a quite bullish picture for aggregate market conviction.
In a different tweet, the blockchain analytic company also noted that even as Bitcoin surpassed $46k, the digital asset is not entering a 2018-like bear cycle. This is because the BTC market still has not seen a notable increase in old coins [> 1y] being spent, which is in contrast with the bear market three years ago, during which the old hands took exit liquidity on most relief rallies.
Currently, Bitcoin for more than one year exhibited a lesser interest in liquidating their investments versus those who held the crypto for 3-6 months. Hence, the latest data signaled that this strong hodling behavior could help the digital asset circumvent a 2018-like mass capitulation event.