Bitcoin price bottom takes shape as ‘old coins’ hit record 78% of supply
Bitcoin (BTC) and the rest of the crypto market have been in a bear market for almost a year. The top cryptocurrency has seen its market cap plummet by more than $900 billion in the aforementioned period, with macro fundamentals pointing to more pain ahead.
Another bear cycle produces more BTC hodlers
But the duration of Bitcoin’s bear market has coincided with a significant increase in the percentage of BTC’s total supply held by investors for at least six months to a year.
Notably, the percentage of coins held for at least one year has risen from nearly 54% on October 28, 2021, to an all-time high of 66% on October 28, 2022, data shows.
This evidence suggests that long-term investors are increasingly viewing Bitcoin as a store of value, argues Charles Edwards, founder of digital asset fund Capriole Investments.
“Despite the worst year in stocks and bonds in centuries, Bitcoiners have never held more Bitcoin,” the analyst noted while highlighting how the floor and ceiling of long-term Bitcoin holdings have increased after each cycle.
Hodler data hints at Bitcoin’s price bottom
In addition, Glassnode’s research shows that the Bitcoin tokens held for at least five to six months are less likely to be sold. The number of these so-called “old coins” usually rises during bear markets, highlighting the accumulation of patient, long-term investors as short-term investors sell.
Related: Gold vs. BTC Correlation Signals Bitcoin Becoming Safe Haven: BofA
The difference in behavior is visible in the chart below, where the decline in Bitcoin’s price coincides with a sustained decline in the number of “younger coins” and an increase in the number of coins inactive for at least six months, or “old coins.”
As of October 31, the old coins make up nearly 78% of the Bitcoin supply in circulation versus younger coins’ 22%, thus reducing the likelihood of intense selling while forming a potential market bottom.
Moreover, on-chain data tracking Bitcoin’s price and its long-term owners’ (LTH) net unrealized profits and losses (NUPL) suggest a similar scenario.
In particular, 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 bullish reversals seen in November 2011, January 2015 and December 2018.
As Cointelegraph reported, MicroStrategy, the world’s largest corporate owner of Bitcoin, has also reiterated its commitment to continue buying BTC for the long term.
“We have a long-term time horizon, and our core business is not affected by short-term Bitcoin price fluctuations,” explained MicroStrategy CEO Phong Le.
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