This podcast delves into the dynamics of the Bitcoin market, focusing on the behavior of short-term and long-term holders. It discusses the impact of these two groups on market volatility and the significance of metrics like unrealized profit and loss, investor sentiment, and cost bases in understanding market structure. The podcast also introduces a new dashboard, “Percent Supply in Profit,” which analyzes the incentive for people to start spending their Bitcoin.
Bitcoin Market Correction and Holder Behavior
- Bitcoin’s Recent Correction: The podcast discusses the recent correction in Bitcoin’s price, which is down about 20% from its high of $49,000. This is seen as a healthy correction in a macro uptrend.
- Holder Behavior: Long-term holders are statistically the least likely to spend their Bitcoin, while short-term holders are more likely to react to market volatility. The current long-term holder supply is substantially higher than in previous cycles, indicating more hodling in the space.
Percent Supply in Profit Dashboard
- New Analytical Tool: The podcast introduces a new dashboard called “Percent Supply in Profit” that measures the proportion of coins that are in profit or loss, determining the incentive for investors to make a decision.
- Insights into Investor Behavior: The dashboard provides insights into investor behavior and the overall profitability of the market. It focuses on the unrealized component of profit, which is the incentive to spend, and the spending activity component, which measures if investors actually took action.
Impact of Short-term Holders
- Market Volatility: Short-term holders are important to track as they are more likely to spend and create volatile reactions in the market. The decline in short-term holders’ supply in profit indicates that many traders are now trapped above the $39,000 price level.
- Market Correction: The current uptick in losses for short-term holders indicates a classic uptrend correction, but the market has not yet reached top heaviness. The percentage of short-term holders’ supply in profit was above 90%, indicating a high incentive to take profits.
Long-term Holder Behavior
- Market Stability: Long-term holders are more useful towards cycle extremes and can withstand volatility and price fluctuations. They are almost back into profit, indicating a distribution phase where coins are transferred from long-term to short-term holders.
- Market Momentum: Long-term holder supply and profit is a macro long-term oscillator that shows the momentum of the market. The long-term holder supply has decreased from its all-time high, while the short-term holder supply is just starting to increase.
- Bullish: The podcast expresses a bullish sentiment towards Bitcoin, highlighting the recent correction as a healthy part of a macro uptrend. The increased supply of long-term holders is seen as a positive sign of more hodling in the space.
- Bearish: There is a bearish sentiment towards short-term holders, with the podcast noting that many are now trapped above the $39,000 price level. The decline in short-term holders’ supply in profit suggests a top-heavy market.
- Neutral: The podcast maintains a neutral stance on the overall market dynamics, emphasizing the importance of understanding both short-term and long-term holder behavior and the role of various metrics in analyzing the market.