A Bitcoin (BTC) on-chain indicator, which tracks the amount of coin supply held by long-term holders (LTHs) at losses, is signaling that a market bottom could be near.
An eerily accurate Bitcoin bottom indicator
As of September 22, roughly 30% of Bitcoin LTHs were facing losses due to BTC’s plunge from $69,000 in November 2021 to around $19,000 now. That is about 3%-5% below the level that previously coincided with Bitcoin market lows.
For example, in March 2020, Bitcoin price fell below $4,000 amid the COVID-19-led market crash, which occurred as the amount of BTC supply held by losing LTH surged towards 35%, as shown below .
Similarly, Bitcoin’s December 2018 bottom around $3,200 coincided with the LTH loss metric rising above 32%. In both cases, the BTC/USD pair continued to enter a long bullish cycle.
Therefore, the number of LTHs at loss during a typical bear market tends to peak in the 30%-40% range. In other words, the price of Bitcoin still has room to fall—likely in the range of $10,000 to $14,000—for “losing LTHs” to reach the all-time bottom zone.
Coupled with the LTH supply metric, which tracks the supply of BTC held by long-term holders, it appears that these investors accumulate and hold during market downturns and distribute during BTC price uptrends, as shown. illustrated below.
Therefore, the next bull market may start when the total supply held by LTHs starts to decline.
Bitcoin accumulation is strong
Meanwhile, the number of accumulating addresses has been steadily increasing during the current bear market, data shows. The metric tracks addresses that have “at least two incoming foreign transfers and have never spent funds.”
Interestingly, this differs from previous bear cycles, in which the number of accumulation directions declined or remained flat, as shown in the chart above, suggesting that hodlers are not intimidated by price levels. current.
Also, the number of addresses with non-zero balance stands at around 42.7 million, up from 39.6 million at the beginning of this year, showing steady user growth in a bear market.
BTC Price Technical Data Points to Further Declines
However, Bitcoin is struggling to reclaim $20,000 as support in a higher interest rate environment. Its correlation with US equities also points to a further decline in 2022.
From the technical point of view, Bitcoin could fall further towards $14,000 in 2022 if its handle-and-cup breakout pans out, as shown below.
Such a move should push the aforementioned “LTH at a loss” metric towards the 32%-35% capitulation region, which could ultimately coincide with the bottom of the current bear market.
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