Glassnode: Hodler behavior will determine the resilience of Bitcoin’s rally

The perception of the current Bitcoin rally as either a bull trap or an opportunity for strategic buying will shape the sentiment of long-term investors, according to Glassnode analysts.

The recent market rally has pushed #Bitcoin prices above $23k, surprising many investors.

However, with higher prices comes an increased motivation for network participants to take exit liquidity, especially after the prolonged bear of 2022

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— glassnode (@glassnode) January 23, 2023

The Bitcoin rally off December lows has pushed a large portion of the coin supply into profit, creating incentives for speculators and miners to close positions. Since January 8, the balances of these entities have fallen by 5,600 BTC.

The share of “profitable” coins in the total supply over the last two weeks surged to a record pace relative to prior bear phases — from 55% to 67%. Analysts attributed this to a sizable number of bitcoins changing hands at prices below $23,300.

The return of the metric to the 55-80% corridor is associated with bottoming and a transition to a balanced state.

The volume of realized profits exceeded the corresponding measure of realized losses. Previously the opposite was observed, and against the backdrop of the collapse of Terra ecosystem and FTX, two capitulations equivalent to 2.9% and 3.7% of Bitcoin’s market capitalization occurred.

The largest spendings were in the youngest coins — from one day to six months old. In 2021 and much of 2022 they played an ever-diminishing role in market participants’ outlays. 

The current price, after 6.5 months, has surpassed the cost basis of the Bitcoins held by hodlers ($22,600). In this regard, the current bear market is comparable to what occurred in 2018-2019. At times, paper losses among long-term investors averaged about 33%.

Since early December the number of coins aged over six months has risen by 301,000 BTC. This is an indicator of conviction in the durability of the current rally. 

Monthly hodler accumulation rates reached 100,000 BTC. After the FTX collapse they were disposing of Bitcoin at a rate of 314,000 BTC per month.

In the last week, price resilience was supported by long-term investors who continued to accumulate coins. Experts say this is a marker that hodlers remain confident in Bitcoin’s prospects and are betting on a bullish macro-trend.

“Monitoring their spending is likely to be the key focus of monitoring in the coming weeks,” the analysts said.

Earlier LookIntoBitcoin experts envisaged a transition to the early stage of the bull market.

Earlier Glassnode pointed to a likely attainment of a local maximum for the price of the leading cryptocurrency local maximum.

As reported, Bloomberg strategist Mike McGlone previously forecast that the Nasdaq Composite would dip below its 200-day moving average, which could delay the rally in digital gold.

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