Research Summary

The report analyzes the performance of Bitcoin, highlighting the behavior of Long-Term Holders (LTH) and Short-Term Holders (STH). It discusses the thinning supply of Bitcoin, the supply discovery, and the market conditions affecting both LTH and STH. The report also provides insights into the impact of the ETF sell-the-news correction.

Key Takeaways

Bitcoin’s Performance and Thinning Supply

  • Bitcoin’s Rally: Bitcoin has rallied to multi-year highs above $50k, with a year-to-date return of +18.5%. It is up +130% over the last 12 months and +207% since the Nov 2022 lows. This has resulted in a thinning supply of Bitcoin held at a loss, which is now just 13% of the global total.
  • Long-Term Holders’ Activity: LTH have spent approximately 300k BTC since their supply peaked in Nov 2023. Half of these reflect GBTC outflow volumes. The LTH supply balance has decreased by approximately 299.5k BTC since Nov 2023.

Supply Discovery and Market Conditions

  • Supply Discovery: A super majority of BTC is now in a profitable state, with only 13% of the total supply acquired above $48k and held at a loss. The majority of coins (87%) were acquired below $48k.
  • Market Conditions: The ETF sell-the-news correction in Jan-Feb has many characteristics of a classic ‘bull market correction’ through the lens of STH. The percent of STH supply in profit fell from its peak at ~100%, to retest its all-time-average of 57.5%.

Impact of ETF Sell-The-News Correction

  • ETF Sell-The-News Correction: The correction after the ETFs launched has resulted in a healthy reset of several metrics. The STH supply in profit fell from its peak at ~100%, to retest its all-time-average of 57.5%. This suggests a ‘garden variety’ correction rather than a ‘top-heavy’ market condition.

Actionable Insights

  • Monitor Long-Term Holders’ Activity: The spending activity of LTH can provide insights into market trends and potential shifts in investor behavior. The decrease in LTH supply balance since Nov 2023 may indicate a transition in investor behavior.
  • Assess Market Conditions: The characteristics of the ETF sell-the-news correction and its impact on STH supply in profit can provide valuable insights into market conditions and potential investment strategies.
  • Track Supply Discovery: The profitable state of a super majority of BTC and the thinning supply held at a loss can provide insights into market trends and potential investment opportunities.

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