Bitcoin short-term holder demand weakens, long-term accumulation continues: CryptoQuant

Quick Take

  • CryptoQuant noted the number of bitcoins held by short-term holders has been declining since late May, suggesting a weakening in demand.
  • In contrast, long-term bitcoin holders appear to accumulate in the face of this short-term holder capitulation.
The number of bitcoin held by short-term holders has been declining since late May, indicating a weakening in demand, according to an analyst.

"The fact that short-term holders are not accumulating can mean demand for bitcoin remains weak," CryptoQuant Head of Research Julio Moreno told The Block. Moreno added that bitcoin long-term holders are accumulating in the face of this short-term holder capitulation. However, Moreno said that the opposite of this dynamic could play out if demand for bitcoin grows again, "leading to short-term holders buying from long-term holders."

The CryptoQuant analyst further highlighted charts that showed a notable shift in bitcoin ownership dynamics. They revealed that short-term holders—those who have held their bitcoin for 155 days or less—have significantly reduced their positions, particularly throughout July and August.

The number of bitcoins held by short-term holders has declined since late May. Image: CryptoQuant.

CryptoQuant contributor IT Tech said the dynamic could lead to medium-term price appreciation and market stabilization. Increased accumulation by long-term holders could lead to price stabilization and position the market for a potential rebound, while short-term holder sell-offs may create short-term downward pressure on bitcoin prices. The data shows a clear capital flow from weak hands (short-term holders) to strong hands (long-term holders), signaling market stability," they said.

The CryptoQuant contributor referred to a chart showing many short-term investors exiting the market during the last two weeks, either realizing profits or losses. According to IT Tech, the red areas on CryptoQuant's short-term holder net position chart indicate that this group of investors is "becoming discouraged by volatility and attempting to reduce risk."
Charts show a significant amount of short-term holder selling in the past two weeks. Image: CryptoQuant.
In contrast, the CryptoQuant contributor observed a net position increase by the long-term bitcoin holder cohort. "Long-term holder net positions have risen, suggesting that long-term investors continue to accumulate bitcoin," they said. The analyst sees this dynamic as an opportunity for growth. "The increase in long-term holder positions may indicate that long-term investors view current price levels as an opportunity for accumulation in anticipation of future growth," they added.
 
Bitcoin traded flat in the past 24 hours, changing hands at $56,588 at 5:23 a.m. ET, according to The Block’s Price Page. The price of ether decreased by almost 1% to $2,330 in the same period.

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About Author

Brian McGleenon is a UK-based markets reporter for The Block. He has worked as a financial journalist and producer for multiple news outlets over the years, such as Fuji Television, The Independent, Yahoo Finance, The Evening Standard, and The Daily Express. Brian is also a screenwriter and producer with one feature film produced and one in development with Northern Ireland Screen. Apart from web3 and cryptocurrency developments, he is also interested in geopolitics, environmental issues, artificial intelligence, and longevity research. Get in touch via email [email protected].

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