Increase in short-term BTC holders indicates "final flush" of sellers

The fact that short-term investors are increasing their BTC holdings suggests that significant sell-offs have occurred.

The “last flush” of sellers, which might be indicated by a recent rise in short-term BTC holders, would indicate that the capitulation events have concluded and the market is now set for months of accumulation.

According to the most recent The Week On Chain report published on August 15 by market research firm Glassnode, short-term holders (STHs) have increased their holdings by 330,000 BTC since the disastrous LUNA collapse in May. They might so serve as the canary in the mine, indicating the direction of a market rebound.

Short-term Bitcoin (BTC) holders started a new trend by purchasing incredibly cheap coins at or around $20,000 during the massive sell-offs that began in May through June, putting them in an “advantageous financial position.”

After a dramatic capitulation event, the ownership structure of #Bitcoin has been reshaped.

As markets sell-off, $BTC migrates from weaker hands, to those stepping in at the lows. Here, we explore how to track this migration of coins using age bands.https://t.co/xBxdvALRmZ
— glassnode (@glassnode) August 15, 2022

According to the analysis, exchange net outflows since May and an outflow of roughly 200,000 coins from long-term holders (LTHs) appear to have been the main causes of the rising STH supply. All of these things point to a capitulation, and STHs “stepped in during the flush out, and now own coins with a substantially reduced cost base,” according to the report.

Wallets that have only held Bitcoin for 154 days or less are known as STHs. They reach LTH status at 155 days.

As “extreme STH accumulation is typically synchronous with bull market topping forms,” STHs typically buy coins at or near all-time high values then sell them for considerably lower prices. Glassnode claimed that this tendency was being defied by purchasers from May and June, who produced a “constructive divergence.”

“Such events describe a transfer of coins to new buyers whom are initially classed as STHs, but have a low cost basis, but are in an advantageous financial position to HODL from there on,” it added.

Whether the new STHs from May and June “have the conviction to hold on” and contribute to future price hikes is the next part of a market reversal that experts must consider, according to Glassnode.