Despite remaining far from its all-time high, Bitcoin supporters are bolstering bullish sentiment by analyzing investor behavior.
Even with recent gains, Bitcoin is still down over 30% from its November 2021 peak near $69,000. However, on-chain data reveals a growing trend of long-term holding—a sign of investor confidence.
Key Trends in Bitcoin Ownership
- 75% of circulating Bitcoin is held in illiquid addresses (wallets spending less than 25% of inflows).
- 57% of Bitcoin hasn’t moved from anonymous addresses in over a year—a hallmark of long-term holding.
Noelle Acheson, Market Insights Lead at Genesis Global Trading, notes:
"This illiquidity explains why Bitcoin’s daily price action often mirrors risk assets like stocks. While long-term holders accumulate, short-term traders react to macro trends—driving volatility."
The Shift from Short-Term to Long-Term Holders
Brett Munster of Blockforce Capital highlights a pivotal trend using Glassnode data:
- Since July 2021, Bitcoin has steadily migrated from short-term to long-term holders.
- This shift accelerated during last month’s price drop, further reducing sell pressure.
Munster writes:
"Long-term holders create a strong foundation—making drastic sell-offs unlikely. Recent leverage liquidations didn’t trigger steep declines, possibly due to these steadfast believers."
👉 Want to track Bitcoin’s real-time holder trends? Explore deep market insights here.
The "Dormancy Flow" Metric: A Bullish Signal
This lesser-known indicator compares Bitcoin’s market cap to its annualized coin days destroyed (a measure of transactional inactivity).
How It Works:
- Coin days = Bitcoin held × days since last transfer.
- When coins finally move, their "days" are destroyed—reflecting renewed activity.
Acheson observes:
"Dormancy Flow has dipped below historical levels that signaled past market bottoms. While today’s drivers differ from 2020 or 2019, such metrics warrant attention."
Declining Volatility Suggests Market Maturity
Bloomberg data shows Bitcoin’s 90-day volatility has trended downward—a potential sign of consolidation.
Mike McGlone, Bloomberg Intelligence Analyst, adds:
"Bitcoin volatility typically spikes at new highs. Since February, flat prices coupled with lower volatility imply the bull market is stabilizing."
FAQ Section
Q: Why do long-term holders matter for Bitcoin’s price?
A: They reduce sell pressure and provide market stability, making extreme crashes less likely.
Q: What’s the significance of illiquid Bitcoin addresses?
A: Illiquid wallets indicate strong holding conviction, limiting available supply and potentially driving future price increases.
Q: How reliable is the Dormancy Flow metric?
A: While historically aligned with bottoms, always combine it with macro and on-chain analysis for full context.
👉 For institutional-grade crypto analysis, check out these tools.