A recent analysis by CryptoQuant has revealed a significant decline in the supply of bitcoin held by short-term holders (STH). This trend, which hasn’t been observed since 2012, is potentially hindering the cryptocurrency’s ability to break out of its current price range.
The data shows a shift in bitcoin ownership towards long-term holders (LTH), those who have held their coins for 155 days or more. While this accumulation by LTH is often seen as a precursor to price increases, CryptoQuant’s Head of Research, Julio Moreno, emphasizes the importance of fresh demand from STH to sustain a rally.
“Historically, bitcoin’s bull cycles have been characterized by new holders purchasing coins from LTH, driving up prices,” Moreno explained. “Although LTH accumulation is a positive sign, we need to see increased activity from STH to create a sustainable uptrend.”
CryptoQuant’s charts demonstrate a strong correlation between STH activity and bitcoin’s price. Moreno added that the current lack of significant new demand from STH is a potential obstacle to a price breakout.
