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Bitcoin on chain analysis: BTC price is about to rally



In this Bitcoin on-chain analysis, we take a closer look at the behavior of long-term and short-term holders, the number of BTC they hold, and the number of BTCs in circulation (liquid or illiquid BTC). The on-chain data shows us that the BTC market is at the end of an accumulation phase that has been followed by a sharp rise in the bitcoin price in the past.


Bitcoin long-term holders start selling

The “Long-Term-Holder-Net-Position-Change-Indicator” shows the change in Bitcoin stocks that are in the hands of long-term holders (LTH). A Bitcoin address on which the BTC has been stored for at least 155 days (approx. 5 months) is an LTH address.


In the past there was mostly a negative correlation between the Bitcoin price and the LTH-Net-Position-Change-Indicator. The LTH accumulated BTC when the bitcoin price fell. When the LTH sold, the Bitcoin price usually went up. In this case, the LTH sell their BTC to the short-term holders (the participants in the market who only hold the BTC for a short time). The latter buy the BTC when the Bitcoin price rises and sell it when the Bitcoin price falls.


The next BTC bullrun could be imminent

In the first half of November (2021) the indicator fell back into negative territory. The indicator was last in negative territory in April 2021. At this point in time, the Bitcoin price was near the all-time high of USD 64,800 or the top at the time. After that there was a strong correction (55%) which ended in July at the bottom at USD 29,000. At this point in time the indicator reached its last high point - the long-term holders bought the dips.


We can currently see a possible trend reversal. More and more LTH are starting to sell. In October 2020 you can see the first red histogram bars (the blue circle on the left). At this point, the Bitcoin price has broken out of the resistance area at USD 12,500. The first exponential ascent of the bull run started at this point. The BTC price then rose by 417% within just 6 months.


The popular on-chain analyst @WClementeIII commented on the event on Twitter:


“The first red bars of the LTH-Net-Position-Change-Indicator have appeared on the chart for 6 months. That means that the redistribution phase in the bull market has just begun. "



Amazingly, this event was so important to CNBC, one of the largest business television networks in the world, that it was featured on a news program. Another on-chain analyst @DylanLeClair _ posted a screenshot of the CNBC news and said: “It was about time”.


Short-term holder supply signals an opportunity to buy

The change in the behavior of the LTH matches the on-chain data of the short-term holder (STH). The stocks of the STH are currently reaching an extremely low area at which a medium-term bear market was normally over or a new bull cycle began.



The next chart is part of Glassnode's last weekly on-chain report . On this you can see the number of BTC stocks held by STH. These are in an area that has had the best dip buying opportunities in the past (green area). After that, the Bitcoin price (the black line) rose sharply every time.


Values ​​below 3 million BTC signal that an accumulation phase is beginning, as the majority of the BTC in circulation goes into the hands of the LTH. It looks like a new Bitcoin rally could be coming soon . Values ​​above 4.5 million BTC, on the other hand, indicate that a distribution phase is imminent, as most LTH sell their BTC to the STH. When that happened, the uptrend usually ended and a corrective phase followed.


Long-term Bitcoin holders own much of the offer


The graphic just shown also fits the Long-Term-Holder Supply Percentage indicator, which has already risen to over 80% and is currently close to the last all-time high (green area). If a significant proportion of the LTH holder positions were in the loss, then so far that has been a good signal for the end of a bear market (light blue area). If the LTH positions were in profit, however, then an exponential increase in the bitcoin rate was usually imminent.



Since the correction in May or since the lows of July 2021, the number of LTH positions has risen quite sharply. LTH currently hold the majority of the Bitcoin in circulation and their positions are clearly in profit. More and more Bitcoin are being accumulated, the BTC liquidity is low and the Bitcoin price seems to be ready for the next upward phase of the long-term bull market.


A severe lack of liquidity in Bitcoin is driving the rally

Let's take a look at another on-chain indicator, namely the number of illiquid and liquid BTC (in percent). Liquid BTC can be sold instantly, while illiquid BTC is the opposite. Like the previous indicators, the chart shows us that the Bitcoin price could be in a crucial phase at the moment.


The number of illiquid Bitcoin (the blue line) recently hit a new all-time high. The LTH, which currently own a record number of BTC, are not ready to sell them at the moment. At the same time, the number of liquid BTC is close to the last low of April 2021. In this month, the Bitcoin price reached its historic all-time high.


The number of illiquid BTC fell during the correction phase last summer (upper orange area), while the number of liquid BTC rose sharply (lower orange area). Then the two graphs diverged again. So the number of Bitcoin in circulation has fallen sharply since then.


The behavior of the long-term and short-term holders and the shrinking Bitcoin supply signal that the BTC price could soon rise sharply.


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All information contained on our website has been researched to the best of our knowledge and belief. The journalistic contributions are for general informational purposes only. Any action that the reader takes based on the information found on our website is entirely at your own risk.


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