Over the past week, long-term Bitcoin holders have increased their spending to levels that suggest risk reduction from the market, but hodling remains the predominant investment strategy.
Uncertain macroeconomic headwinds likely hastened last week’s increase in sell-off by long-term holders and knocked some short-term holders out of their positions, according to data from analyst firm Glassnode. Last week, coins older than six months accounted for 5% of total spending, a level not seen since last November.
Short-term holders (STH) holding coins for less than 155 days continue to decline, but not necessarily because of the sale. Glassnode suggests that while STH tends to trade more often, the recent decline in STH supply “can only happen when the majority of coin supply is at rest and exceeds the 155-day age threshold, becoming a long-term holder supply.”
Bitcoin (BTC) accumulation patterns do not suggest bear market behavior as the overall selling pressure remains constant. In addition, more than 75% of BTC’s working capital has been dormant for at least six months, despite the recent surge in sales. Glassnode says this shows that investors are still predominantly hodlers.
Glassnode noted that the sell-off took place in a relatively strong market that avoided any significant up or down moves and remained in a range for much of this year. This is believed to prevent the surrender event that often occurs at the end of a bearish cycle. According to CoinGecko, there has been no significant capitulation since May last year, when the price of BTC fell from $58,771 to $34,977 over a 15-day period.
The period from the May capitulation to October marked the last time that BTC accumulation resembled bear market behavior.
The profit/loss ratio of the STH offer is still close to the historical low set in mid-2021. Currently, 82% of STH coins are in the red, which Glassnode says is a sign of a later stage of the bear market, with savvy investors putting their coins into cold storage to wait for a return to a positive rate of return.
Related: BTC price struggles below $39k ahead of expected Fed rate hike
As noted in last week’s BTC market review, the exchange outflow remains quite high. Last week, Coinbase posted its biggest outflow in nearly five years, with 31,130 BTC leaving the exchange. These outflows illustrate Bitcoin’s growing reputation as a must-have item in the modern investor’s portfolio, as well as a continued reluctance to liquidate it in a hurry.