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

Markets•September 11, 2024, 5:58AM EDT
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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.
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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.