This Bitcoin long-term holder metric is nearing the BTC price ‘bottom zone’

Bitcoin accumulation is in full swing during the downtrend despite BTC price having more room to drop.

A Bitcoin (BTC) on-chain indicator, which tracks the amount of coin supply held by long-term holders (LTHs) in losses, is signaling that a market bottom could be close.

Eerily accurate Bitcoin bottom pundit

As of Sept. 22, approximately 30% of Bitcoin’s LTHs were facing losses due to BTC’s decline from $69,000 in November 2021 to around $19,000 now. That is about 3%–5% below the level that previously coincided with Bitcoin’s market bottoms.

For instance, in March 2020, Bitcoin price declined below $4,000 amid the COVID-19-led market crash, which happened when the amount of BTC supply held by LTH in loss climbed toward 35%, as shown below.

Bitcoin long-term holder supply in losses. Source: Glassnode

Similarly, Bitcoin’s December 2018 bottom of around $3,200 concurred alongside the LTH loss metric rising above 32%. In both cases, BTC/USD followed up by entering a long bullish cycle.

Hence, the number of LTHs in loss during a typical bear market tends to peak in the 30%–40% range. In other words, Bitcoin’s price still has room to drop — likely into the $10,000–$14,000 range —for “LTHs in loss” to reach the historic bottom zone. 

Coupled with the LTH supply metric, which tracks the BTC supply held by long-term holders, it appears that these investors accumulate and hold during market downturns and distribute during BTC price uptrends, as illustrated below.

Bitcoin total supply held by LTH. Source: Glassnode

Therefore, the next bull market may begin when total supply held by LTHs begins to decline. 

Bitcoin accumulation is strong

Meanwhile, the number of accumulation addresses has been increasing consistently during the current bear market, data shows. The metric tracks addresses that have “at least two incoming non-dust transfers and have never spent funds.”

Bitcoin number of accumulation addresses. Source: Glassnode

Interestingly, this is different from the previous bear cycles that saw the number of accumulation addresses drop or remain flat, as shown in the chart above, suggesting that “hodlers” are unfazed by current price levels. 

In addition, the number of addresses with a non-zero balance stands around 42.7 million versus 39.6 million at the beginning of this year, showing consistent user growth in a bear market.

Bitcoin number of addresses with a non-zero balance. Source: TradingView

BTC price technicals hint at more downside

Bitcoin is nevertheless struggling to reclaim $20,000 as support in a higher interest rate environment. Its correlation with U.S. equities also hints at more downside in 2022.

Related: Bitcoin analysts give 3 reasons why BTC price below $20K may be a ‘bear trap’

From a technical perspective, Bitcoin could drop further toward $14,000 in 2022 if its cup-and-handle breakdown pans out, as shown below.

BTC/USD three-day price chart featuring cup-and-handle pattern. Source: TradingView

Such a move should push the aforementioned “LTH in loss” metric toward the 32%–35% capitulation region, which could ultimately coincide with the bottom in the current bear market. 

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Related Posts

1inch wallet users get domain names with Unstoppable Domains partnership

The DEX aggregator said the partnership would promote the wider adoption of DeFi and Web3 products and services. Decentralized exchange aggregator 1inch has partnered with Unstoppable Domains…

Wall Street disaster expert Bill Noble: Crypto spring is inevitable

“It’s 10% up or 10% down each day. I don’t have to wait five years in between crises. As a matter of fact, I only have to…

Ripple to surge 50% due to new partnership and comments from former SEC director to XRP case

According to analysts, XRP is just a breakout away from marking a 50 percent price rally. According to independent market analyst DonAlt, a loss for Ripple would…

Is payments giant SWIFT preparing for a blockchain-bound future?

Are TradFi and DeFi converging, moving toward a middle ground that includes tokenized assets, interoperability and regulation? SWIFT is a payments colossus. It operates across more than…

Banks hold $9,200,000,000 in Bitcoin, Ethereum, Solana and other cryptos – Will they increase their share?

The total exposure of top global banks to crypto assets is more than $9.2 billion and of this, Bitcoin and Ethereum have a combined share of more…

Tao Te Ching (TTC): Can Chinese Wisdom Justify Its $661 Price?

Tao Te Ching takes its name from the ancient book of Chinese wisdom, but is this microcap memecoin with its ultra low circulating supply the way, or…

Generated by Feedzy