Bitcoin’s sell pressure has waned dramatically compared to two months ago, with more long-term investors holding onto their BTC longer, according to crypto analytics firm Glassnode.
Bitcoin’s “Value Days Destroyed (VDD) Multiple” has undergone an “epic cooldown” over the past few weeks, according to lead Glassnode analyst James Check, returning the top cryptocurrency to accumulation mode.
The on-chain metric compares near-term Bitcoin spending behavior to its yearly average, with a focus on coins that haven’t moved in a long time. The ratio rises when long-term holder selling is relatively high and falls as investors pivot back to HODLing.
“This is essentially indicating that old coins have stopped moving on-chain, allowing breathing space for new demand bids to hit… well… a lack of supply,” Check wrote on Twitter on Monday. “Long-term holders need higher prices to motivate sales.”
Truly epic cooldown on the #Bitcoin Value Days Destroyed Multiple.
This is essentially indicating that old coins have stopped moving on-chain, allowing breathing space for new demand bids to hit…well…a lack of supply.
Long-Term Holders need higher prices to motivate sales. pic.twitter.com/o2g1nakJst
— _Checkmate 🟠🔑⚡☢️🛢️ (@_Checkmatey_) May 6, 2024
On-chain analysts say that large Bitcoin price corrections during a bull run are driven by long-term holders looking to cash out when the Bitcoin price rises substantially above the average price at which they bought in.
While the total long-term holder supply generally rises over time, it has historically fallen precipitously during Bitcoin’s largest bull runs, such as in early 2021 as well as early 2024.
Extremes in the VDD Multiple—greater than 2.9—have proven effective at identifying local and absolute tops in a Bitcoin bull market, Glassnode’s data shows, including the 2017 peak during the network’s third halving epoch. Back in March, the ratio re-entered extreme territory over 4.0 but has now fallen to less than 1.4.
A similar cooldown can be observed in long-term holder spending as a percentage of Bitcoin’s total supply.
“It decreased from almost 5% in March to 2% in April, indicating that long-term holders stopped spending in April,” said CryptoQuant Head of Research Julio Moreno told Decrypt.
Late last week, CryptoQuant CEO Ki Young Ju claimed that active Bitcoin whales had absorbed 47,000 BTC over 24 hours after Bitcoin’s price fell below $57,000 at the start of May. Check said at the time that the price drop looked like a standard bull market correction—and argued that it was a good time to buy the dip.
Whales are buying the dip, but is their conviction dwindling?
🛍️Addresses holding over 1000 BTC have accumulated strongly in recent months, especially during dips.
📈Prices have increased shortly following every accumulation.
However, note that each spike in accumulation by… pic.twitter.com/OkbekJr5NC
— IntoTheBlock (@intotheblock) May 6, 2024
Likewise, Bitcoin ETFs netted $379 million of inflows on Friday, breaking a seven-day streak of straight outflows and marking the best day for the nascent investment products in several weeks.
Edited by Ryan Ozawa.
