The past behavior of participants is an important factor in determining the length of a market cycle. There are two major currents that change the direction of the price movements - long-term holders LTHs and short-term holders STHs Long-term holders are defined as addresses that have held Bitcoin longer than 155 days. They are often seen as smart investors in the space, as the majority of them have withstood market volatility and managed to accumulate at the bottom and sell at the top.
Short-term holders are addresses that have held Bitcoin for less than 155 days and are seen as the more price sensitive group that is affected by volatility.
This is further corroborating when looking at the behavior of LTHs and STHs. Since 2010, long-term holders have bought BTC every time its price was pushed downward and sold into almost every peak.
Recent changes in the net positions of long-term holders show that they have been capitulating. The slump in the virtual currency caused by the Terra LUNA blowback and the Celsius crisis has pushed many LTHs to sell their positions.
LTHs selling their positions is usually taken as a sign of a market bottom.
According to Glassnode, the sell-off that began in May reached its peak in July and is now tapering off. The graph below shows the change in position for long-term holders, with the red highlights showing a decrease in the overall position and the green highlights showing an increase in their holdings.
The long-term holders have to sell their holdings after being pushed out by zooming out. Long-term holders capitulated out of fear and uncertainty when the COVID- 19 pandemic crushed global markets in March 2020. Their capitulation set off a price drop that took until July that year to recover.
The next major sell-off took place between January 2021 and May 2021. The sell-off meant long-term holders were taking significant profits when they saw the price of Bitcoins deep in a bull run.
The capitulation we saw in April 2022 is still ongoing. Like the one in March 2020, this capitulation has triggered a massive price drop, pushing Bitcoins down to $20,000 for the better part of the summer. The accumulation rate remains small despite the fact that we have seen selling subdue since August.
We are yet to see if this is the beginning of another accumulation period and whether the small increase in the accumulation rate will surpass the sell-off. If the previous bear cycles repeat, the price ofBitcoin could see a gradual rise, followed by an increase in the amount of BTC accumulated by LTHs.