Bitcoin 'Diamond Hands' Show Resilience Amidst Bull Market: Glassnode Report
Summary:
Bitcoin "diamond hands" or long-term holders (LTHs) are not rushing to sell, even with Bitcoin's price hovering near $70,000, suggesting that they don't perceive the cryptocurrency's value as having peaked at its $73,800 high, according to a research by on-chain analytics firm Glassnode. The observed selling pressure is reportedly half as intense as previous bull market peaks. Despite this, should the bullish trend continue to new all-time highs, LTHs could significantly increase their selling activity. The report also notes ongoing sales from investors in the Grayscale Bitcoin Trust.
Bitcoin (BTC) holders, termed as "diamond hands," aren't behaving like the price of BTC peaked at its record of $73,800. According to an analysis conducted by on-chain analytics company Glassnode on May 28, the selling drive from long-held coins is just over half as forceful as previous peaks in bull markets.
Despite Bitcoin values hovering near $70,000, long-term holders (LTHs) continue to resist cashing in their profits. Even though their average profit stands at 3.5 times, their selling volume isn't substantial enough to threaten the current bullish market.
Glassnode's latest weekly newsletter, "The Week On-Chain," notes, “As the price increases due to renewed buying pressure, the importance of the selling pressure from Long-Term Holders grows in tandem.” This presents the chance to evaluate unrealised profits of LTHs as an indication of their propensity to sell and their real profits to gauge actual sell-offs.
Referring to wallets that have held BTC for 155 days or longer, LTHs are typically at the less speculative end of the Bitcoin investor spectrum. Glassnode utilizes a metric known as market value to realized value (MVRV) to depict LTHs entering historically high levels of unrealized profit.
The report further elaborated, “If the market uptrend remains sustainable, forming new ATHs in the process, the unrealized profit held by LTHs will expand. This will substantially elevate their incentive to sell, and eventually leads to a degree of sell-side pressure that gradually exhausts the demand side.”
However, the analytics firm pointed out a trend of reduced selling pressure from LTHs since the most recent all-time high figure recorded in March. Put in perspective, LTHs did not offload their Bitcoin possessions to the market, even at the record highs of $73,800, as heavily they did during past bull market tops.
The report highlighted, “During the last two bull markets, the LTH net distribution rate reached 836k to 971k BTC/month. At present, the net sell pressure peaked at 519k BTC/month in late March, with approximately 20% of this originating from Grayscale ETF holders.”
The company also noted ongoing sales from those invested in the Grayscale Bitcoin Trust (GBTC), which recently lost its leading spot among spot Bitcoin ETFs in terms of assets under management.
Looking ahead, the report predicts that LTHs will maintain the rising investment pattern that's been evident since late 2023. “In the wake of significant long-term holder investor distribution into the $73k ATH, sell-side pressure has noticeably contracted,” the report concluded.
Published At
5/29/2024 5:27:17 PM
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