This Bitcoin Long-term Holder Calculation Approaches BTC Price’s “Bottom Zone”
A Bitcoin (BTC) on-chain indicator, which tracks the amount of coin supply held by long-term holders (LTHs) in losses, signals that a market bottom may be near.
Incredibly Accurate Bitcoin Bottom Expert
As of September 22, roughly 30% of Bitcoin’s LTHs were facing losses due to BTC’s decline from $69,000 in November 2021 to around $19,000 now. That’s about 3%–5% below the level that previously coincided with Bitcoin’s market bottom.
For example, in March 2020, the Bitcoin price fell below $4,000 amid the COVID-19-led market crash, which occurred as the amount of BTC supply held by LTH in losses climbed toward 35%, as shown below.
Likewise, Bitcoin’s bottom in December 2018 coincided with around $3,200 along with the LTH loss value rising over 32%. In both cases, BTC/USD followed up by entering a long bullish cycle.
Therefore, the number of LTHs in losses during a typical bear market tends to peak in the 30-40% range. In other words, Bitcoin’s price still has room to fall—probably in the $10,000-$14,000 range—for “LTHs in loss” to reach the historic bottom zone.
Coupled with the LTH supply metric, which tracks the BTC supply held by long-term holders, these investors appear to accumulate and hold during market downturns and distribute during BTC price rallies, as illustrated below.
Therefore, the next bull market may begin when the total supply held by LTHs begins to decline.
Bitcoin accumulation is strong
Meanwhile, the number of accumulation addresses has increased consistently in the current bear market, data shows. The metric tracks addresses that have “at least two incoming non-dust transfers and have never used funds.”
Interestingly, this is different from the previous bear cycles that saw the number of accumulation addresses fall or remain flat, as shown in the chart above, suggesting that “hodlers” are unaffected by current price levels.
In addition, the number of addresses with a non-zero balance is around 42.7 million compared to 39.6 million at the beginning of this year, showing steady user growth in a bear market.
BTC price technical hints at more downside
Bitcoin is still struggling to regain $20,000 as support in a higher interest rate environment. The correlation with US stocks also suggests more downside in 2022.
Related: Bitcoin Analysts Give 3 Reasons BTC Price Below $20K Could Be a ‘Bear Trap’
From a technical perspective, Bitcoin could fall further towards $14,000 in 2022 if the cup and handle breakdown pans out, as shown below.
Such a move should push the aforementioned “LTH in loss” value towards the 32%-35% capitulation region, which may eventually coincide with the bottom of the current bear market.
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