Glassnode revealed that there has been a considerable decline in Bitcoin’s sell pressure, as compared to two months earlier.
The crypto analytics firm revealed that an increasing number of long-term investors are holding onto their BTC longer.
Accumulation mode
James Check, a lead Glassnode analyst, said that the past few weeks have seen a major cooldown in Bitcoin’s ‘Value Days Destroyed (VDD) Multiple’, as the top crypto has returned to accumulation mode.
This on-chain metric is aimed at comparing Bitcoin’s spending behavior in the near-term to its yearly average and focuses on coins that have not seen any movement in a long time.
There is a rise in this ratio when there is relatively high long-term holder selling and decline when investors go back to HODLing.
Check disclosed that it indicates that there is no longer on-chain movement in old coins and this has given new demand some breathing space to deal with the lack of supply.
He added that higher prices are the motivation that long-term holders need for selling their Bitcoin holdings.
The analysis
According to on-chain analysts, large BTC price corrections happen during a bull run because long-term holders are looking to cash out when there is a substantial price increase.
If the price is higher than what they paid for, they move to sell their holdings. Generally, there is an increase in long-term holder supply over time.
However, it has declined precipitously historically during the largest bull runs, such as in early 2021 and this year as well.
Data from Glassnode shows that extremes in the VDD Multiple are useful for identifying absolute and local tops in a BTC bull market, which are usually greater than 2.9.
This includes the peak in 2017 when the network was in its third halving epoch. The ratio entered extreme territory once more back in March when it climbed over 4.0.
But, it has now declined to less than 1.4. Long-term holder spending has also seen a similar cooldown as a percentage of the total supply of Bitcoin.
The numbers
Julio Moreno, the Head of Research at CryptoQuant, said that long-term holder spending had stood at 5% in March, but had declined to 2% in April, which marked a decline in spending.
Ki Young Ju, the CryptoQuant CEO, said late last week that about 47,000 BTC had been purchased within 24 hours by Bitcoin whales in the start of May when the token’s price fell below $57,000.
According to Check, the price drop had been a price connection standard for a bull market, and added that it was a good time for investors to buy the dip.
Likewise, the end of last week saw Bitcoin ETF record massive inflows of $379 million, which saw them break a streak of seven days of outflows.
This marked the best day that the nascent investment products had had in several weeks, after enjoying huge popularity at the time of their launch.