Long-term holders stopped spending their coins after massive sell-off on cryptocurrency market
While Bitcoin is still consolidating around the first resistance levels seen since the reversal from around $28,500, the on-chain metric shows a new all-time high of 4.45 million BTC which has not been touched in more than five years. years, according to Glassnode.
The long-term holder supply is one of the best metrics for determining sentiment among long-term investors and those who are considering Bitcoin as a store of value rather than a speculative asset.
The increase in idle supply could suggest that Bitcoin has actually entered an accumulation phase after an active distribution since November. According to the graph, we have seen a strong decrease in idle supply in the middle of 2021 so far.
Why does inactive supply matter?
The number of inactive coins on the network could act as both a social and market indicator. As mentioned, it is easy to determine sentiment among long-term holders but, in addition to it, the Bitcoin Supply Last Active 5+ years ago may reflect the pressure being put on the market.
The decrease in the number of idle coins on the network usually correlates with bearish market trends, as even long-term holders abandon their coins to avoid losses or to break even on their positions.
The highest spending rate of long-term supply is usually observed around a rally’s tops or during a massive sell-off on the market, when panic prevails among all types of investors.
With long-term supply spending normalizing, we saw an almost immediate return to Bitcoin, which gained more than 10% from its value last week. Unfortunately, the rally slowed down as Bitcoin failed to reach the 50-day moving average.
