Bitcoin (BTC) and the rest of the cryptocurrency market have been in a bear market for almost a year. The largest cryptocurrency has seen its market valuation plunge by more than $900 billion in that period, and macro fundamentals suggest more pain ahead.
Another bearish cycle produces more BTC hodlers
But the length of the Bitcoin bear market has coincided with a substantial increase in the percentage of the total BTC supply held by investors for at least six months to a year.
In particular, the percentage of coins held for at least a year has gone from nearly 54% on Oct. 28, 2021, to an all-time high of 66% on Oct. 28, 2022, data shows.
This evidence suggests that long-term investors are increasingly looking to Bitcoin as a store of value, says Charles Edwards, founder of digital asset fund Capriole Investments.
“Despite the worst year for stocks and bonds in centuries, Bitcoiners have never held more Bitcoin”the analyst notes while highlighting how the long-term held Bitcoin bottom and top have been increasing after each cycle.
Hodlers data hint at Bitcoin price floor
Additionally, Glassnode research shows that Bitcoin tokens held for at least five to six months are less likely to be sold. The number of these so-called “old coins” tends to increase during bear markets, highlighting the accumulation by patient, long-term investors while short-term investors sell.
The difference in behavior is visible in the graph below, in which the downward trend of the Bitcoin price coincides with a persistent decrease in the number of “young coins” and an increase in the number of coins that have been inactive for at least six months, or “old coins”.
As of October 31, older coins make up almost 78% of the Bitcoin supply in circulation, compared to 22% for younger coins, reducing the likelihood of intense selling, while also forming a potential market background.
Also, on-chain data tracking the price of Bitcoin and the net unrealized gains and losses (NUPL) of its long-term holders point to a similar scenario.
Notably, Bitcoin’s entry-adjusted LTH-NUPL has entered the capitulation zone (red) which has coincided with the end of previous bear markets, as shown above. That includes the strong bull pullbacks witnessed in November 2011, January 2015, and December 2018.
As Cointelegraph reported, MicroStrategy, the world’s largest corporate Bitcoin holder, has also reiterated its commitment to continue buying BTC for the long term.
“We have a long-term time horizon, and the core business is not affected by short-term Bitcoin price fluctuations”explained MicroStrategy CEO Phong Le.
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