Research Summary

The article provides an in-depth analysis of the behavior of Bitcoin Long-Term Holders (LTHs) during their first bear market cycle. It demonstrates that this group of investors often experiences a painful learning curve, acquiring and holding onto expensive coins throughout the entire bear market, only to capitulate precisely at the cycle low. The article presents three measurable behavior patterns that can be compiled into an actionable signal to identify when the probability of a bear market floor being established aligns with the expulsion of these investors from the market.

Actionable Insights

  • Understand LTH Behavior: The article highlights the significant role of LTHs in the Bitcoin market, particularly those experiencing their first bear market cycle. Understanding the behaviors of these investors, including their tendency to buy high and sell low, can provide valuable insights for market analysis.
  • Monitor LTH Stress Indicators: The article introduces several tools to identify periods of LTH stress, including LTH-MVRV and LTH-SOPR. Monitoring these indicators can help identify when LTHs are under unrealized stress and are likely to capitulate their held supply.
  • Identify Bear Market Floors: The article presents a tool that combines three conditions to indicate when the cohort of single cycle LTHs are experiencing a painful wash-out event. This tool can help identify when the probability of a bear market floor being established is high.

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