Bitcoin hodlers are exiting the ‘capitulation’ phase, and the new metric hints at a brighter future for the cryptocurrency. In the latest edition of its weekly newsletter, “The Week On-Chain,” analytics firm Glassnode unveiled its latest tool for tracking Bitcoin’s resurgence, the “Long Term Holder Spending & Profitability” tool. This new metric reveals a change in sentiment among long-term BTC holders.
For Glassnode analysts, Bitcoin’s long-term investor base is already preparing for better times ahead. The introduction of the new metric aims to split long-term holders’ behavior patterns into four phases – from capitulation, through transition and equilibrium, and finally towards euphoria (the next BTC price cycle top). “Capitulation” refers to the situation in which the spot price is lower than the long-term holder’s cost basis, whereas “transition” is the phase when the market is trading slightly above the long-term holder’s cost basis.
According to Glassnode, the Long Term Holder cost basis lies at around $20,800, and the current market has recently reached the transition phase. The development of this new metric, the Long Term Holder Spending & Profitability, could potentially help identify periods of overheated conditions in the future.
Moreover, short-term holders are also on the radar, as speculative activity has increased in recent times. Their cost basis – at around $26,000 – is becoming an increasingly important level. Despite this, BTC/USD remains in a narrow range, having acted within a $5,000 corridor for almost three months. The digital asset market continues to outperform major commodities, although both are currently experiencing a meaningful correction.
Following the 2022 bear market and signs of recovery in Q1 this year, on-chain metrics have undergone a broad transformation, many suggesting that a long-term BTC price bottom is already in. With price action stagnating since mid-March, however, doubts have returned — along with downside targets that stretch toward $20,000.
In conclusion, Bitcoin hodlers seem to have reached a state of equilibrium, with little gravity in either direction. However, the extremely low volatility and narrow trading ranges of late suggest that this equilibrium is soon to be disturbed. With the new Long Term Holder Spending & Profitability tool at hand, it could provide crucial insights into the behavior of both long-term and short-term holders, which could potentially shape the future trajectory of Bitcoin.
Source: Cointelegraph
