Bitcoin Veterans Dump Long-Term Holdings as Price Nears $20K

Traders who have held Bitcoin for more than 155 days are selling their stash as its price eyes $20,000, a Glassnode study revealed.

ASOL (Please Don’t Read it Loud)

The on-chain analysis platform cited Average Spent Output Lifespan (ASOL), a barometer to gauge the average age of coins that have been transacted. The metric’s higher readings reflects that long-term holders are realizing their profits by selling their Bitcoin.

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Bitcoin ASOL hit a local peak on November 2020. Source: Glassnode
Bitcoin ASOL hit a local peak on November 2020. Source: Glassnode

The chart above showed entry-adjusted ASOL. The metric was rising before November 18, a period that coincided with the Bitcoin price’s rally from $9,800 to as high as $18,800. It showed that more and more long-term traders were selling the cryptocurrency at its local tops.

Glassnode provided complimentary evidences of a dump by measuring the total Bitcoin supply’s profit held by long-term holders, or LTH. The metric peaked on November 17 at 12.3 million BTC when Bitcoin was trading around $17,670. But after that, the cryptocurrency’s price kept on trending upward, but LTH fell by almost 200,000 BTC.

“This,” said Glassnode’s analyst Liesl Eichholz, “supports ASOL’s indication that a meaningful amount of BTC owned by long-term holders was indeed sold around late November, as even though the price has since increased, the LTH supply in profit has decreased.”

Bitcoin Bearish?

With long-term holders exiting the Bitcoin marker with their profits, one could interpreter it as a sign of the market’s underlying weakness. Nevertheless, Glassnode clarified that that the profit-taking behavior was—in fact—bullish.

“The large decreases in total LTH supply seen above make intuitive sense; as these long-term holders realize profits, they leave room for new retail investors to enter the market, which has historically driven bitcoin’s largest bull markets,” explained Ms. Eichholz.

The statements reflected a flurry of recent Bitcoin comebacks after stronger downside corrections. Just recently, the cryptocurrency established an all-time high near $20,000. But the new peak attracted sellers, causing the price to plunge to low as $18,100 (data from Coinbase).

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Bitcoin price is looking to close above $20,000. Source: BTCUSD on TradingView.com
Bitcoin price is looking to close above $20,000. Source: BTCUSD on TradingView.com

Bitcoin later bounced back to above $19,500, showing that bulls were in control of the overall market trend.

“If BTC’s price follows this historical trend,” added Mr. Eichholz, “it indicates that we are in for further price increases before the top is reached.”