On-chain metrics show that Bitcoin is witnessing a significant shift in investor dynamics as the supply transition is changing in favor of long-term holders.
According to the 75th edition of the Bitfinex Alpha Report, long-term Bitcoin holder supply has increased by more than one million bitcoin (BTC) since April 13, 2023, while short-term holder supply has declined by nearly one million BTC within the same period.
Bitfinex analysts defined short-term holders (STHs) as investors who have held BTC for less than 155 days, while long-term holders (LTHs) have held the asset for 155 days or more. While STHs reduced their holdings from April 13 till date, LTHs increased theirs.
On one particular occasion, between September 25 and 26, there was a significant drop of 200,000 BTC on the part of STHs. Within the same period, LTHs saw an increase of 200,000 BTC. Bitfinex analysts believe this is typical behavior for the investor cohorts as STHs usually sell to capitalize on profits or mitigate losses, while LTHs increase their holdings due to their belief in BTC’s long-term potential.
Due to the shift in dynamics, LTH supply is now at an all-time high, while STH supply has dropped to levels seen in roughly eight years. Bitfinex said the gap worsened in the past few weeks as many STHs liquidated their spot positions and realized small profits as BTC spiked to $28,500 at the beginning of the month.
Last week, Bitfinex said many market indicators showed that multiple investor cohorts were in a HODL phase, positioning themselves for a potential bull run. This time, the crypto exchange thinks bitcoin will experience heightened levels of volatility in October because the crypto asset started the month with “a bang,” with its 24-hour volatility increasing by over 340% on October 2.
“With volatility spilling over from the US stock market to Bitcoin and other crypto assets, we currently see isolated high volatility events continue to rise, and with historical volatility sustaining above crucial averages, this trend is likely to continue. Additionally, the options market is currently pricing in more volatility for BTC as in the past,” Bitfinex analysts said.
Meanwhile, BTC appears to have decoupled from major U.S. indices. This is evident in the asset’s price reaching the bottom of its current range sometime before the S&P 500, which just bounced off the 4200 points level.
