A recent Glassnode report says some long-term holders (LTHs) of bitcoin offloaded part of their holdings and cashed out their profits during a bull-run. Still, the report explains that the sell-off, which has been noticeable since late November, is not necessarily a sign of an approaching bear market. Instead, as the data shows, BTC is poised for another rally.
Since Nov. 26, when the price of BTC dropped by more than 17% in 24 hours, the digital asset has recovered and currently trades above $19,000. Some analysts believe that it is only a matter of time before the leading crypto breaches the $20,000 mark.
Therefore, instead of signaling an impending bear market, the report suggests that the move by LTHs to sell fits with the longstanding trend of offloading as the price is going up. Still, the report notes one important factor distinguishing this sell-off. It says:
Long-term holders appear to habitually accumulate BTC in bear markets, and then realize their profits on the way up, but importantly before the top … If BTC’s price follows this historical trend, it indicates that we are in for further price increases before the top is reached.
Meanwhile, the authors of the report seem to base their bullish BTC forecast on changes observed to the “total amount of circulating supply that is currently in profit and is held by LTHs.”
According to Glassnode’s data, when the price of BTC was below $10,000 on July 26, “the LTH supply in profit was 10.8 million.” Now, almost four months later, the price of BTC has nearly doubled yet the “LTH supply in profit has increased by only 11.5% (or 1.2 million), now sitting at 12.1 million.”
According to the report’s explanation, the total amount of profit has increased due to the price hike yet “the number of coins in profit has not risen as significantly.”
Credit: Bitcoin News