Expansion of short-term BTC holders suggests 'final flush' of sellers

Short-term holders are expanding their BTC holdings following the Terra crash

By Shashank Bhardwaj

Image: Shutterstock

There has been a spike in short-term Bitcoin holders that could mean a “final flush” of sellers. This explains that the capitulation events have been played out and that the market is prepared for months of accumulation.

The Terra crash in May this year proved to be deadly for the market. The “Week on the Chain” report by Glassnode, a market analysis firm, reveals that short-term holders have expanded their holdings by 330,000 after the crash, thereby signalling that steady market recovery is not too far away.

In the thick of the crash from May to June, mass sell-offs took place where short-term holders of Bitcoin bought extremely cheap coins at or below $20,000, putting them in a “financially advantageous position.” However, the tides seem to be changing now since the report claims that an outflow of approximately 200,000 coins by long-term holders and exchange net outflows are the reason for the growing short-term holder supply. Capitulation is evident in this scenario and that STHs “stepped in during the flush out, and now own coins with a much lower cost basis.”

Glassnode also comments, “As markets sell-off, $BTC migrates from weaker hands, to those stepping in at the lows.” For some context, short-term holders are those wallets that have held BTC for no more than 154 days while long-term holders have held BTC for 155 days or more.

In a normal scenario, STHs buy coins near all-time-high prices and sell considerably lower since “extreme STH accumulation is normally concurrent with bull market topping formations.” According to the report, the situation seemed to have flipped since buyers created a “constructive divergence” in bucking this trend in May and June. “Such events describe a transfer of coins to new buyers whom are initially classed as STHs, but have a low cost basis, but are in an advantageous financial position to HODL from there on,” it added.

The Glassnode report also looks towards the future and calls from analysts to understand whether the new STHs from May and June “have the conviction to hold on” and further contribute to the swelling prices.

Shashank is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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