Crypto Valley Live (ID: cryptovalley)

, Author: CHECKMATE, translation: Favors, reprinted by Odaily with authorization.

Bitcoin Market Overview

Despite the strong performance in the spot market, the trading price of Grayscale GBTC products has always been at a discount this week, with a discount rate of -7.1% to net assets at the close of last Friday. This reflects not only the impact of the correction, but also the steady rise of new competition in the Bitcoin ETF-like space. At the same time, MicroStrategy announced the purchase of an additional 262 BTC for $15 million as part of their hoarding strategy.

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Grayscale Premium Live Charts

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As Bitcoin price performance continues to impress, it is becoming increasingly important to assess how different market participants react to price increases. Generally speaking, we distinguish between long-term holders (LTH) and short-term holders (STH), the former owning coins older than 155 days, and the latter owning coins younger than 155 days.

We base this on the observation that the majority of the liquidity supply traded each day consists of young coins that were last moved within the past few months. The graph below shows coin age, showing that in most cases, more than 95% of coins are younger than 3 months old (the white space at the top is coins older than 3 months).

Conversely, once a coin passes our 155-day threshold to become an LTH holding coin, it becomes less and less likely to be spent on a statistical basis, tending to only be revived during periods of volatility and when prices are higher in bull markets.

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• Coin Age and Payout Chart

• We often need to make assumptions about the different consumption behaviors of LTH and STH to accurately interpret transaction data on the chain.

LTH we assume they have a decent understanding of the Bitcoin protocol and a high level of belief in the asset. They tend to buy coins at low prices in a bear market and realize profits in a bull market.

We hypothesize that STHs are more likely to be new market participants and traders moving value between exchanges. This group is therefore more sensitive to price fluctuations and thus more likely to spend coins shortly after their last transaction.

The chart below shows the amount of Profitcoins held by each of these entities. Given that BTC prices are effectively at all-time highs, this accounts for nearly the entire supply (after filtering out exchange balances and other known entities).

We can see that since late November 2020 ($17,800), LTHs have gradually sold about 1.4 million BTC (blue, smooth downtrend), while STH has accumulated these coins and taken the volatility ( Red, volatile uptrend), which is typical of a bull market.

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Real-time graph of profit and loss of currency holdings

This paints a picture. The current demand for STH is still strong, and LTH is gradually releasing coins, and the rate of releasing coins is slowing down. However, it should be noted that there is still a larger supply in the hands of LTH, which is good news in terms of liquidity, but as the price rises further, or there is a more sustained correction in the future, it may also become an upper resistance.

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In terms of global supply, the holding wave theory presents a different perspective on the proportion of supply held by UTXOs over a lifetime. As old coins are spent to realize a profit, they are converted from old coins to young coins with their lifespan reset to zero.

The holding wave chart below presents the proportion of circulating supply that is less than 6 months old. The height of these bands increases with more proportion of older coins (older coins become younger coins), and decreases as more coins are held for longer (younger coins become older coins).

Circulating supply less than 6 months old continued to increase at all significant peaks, peaking at 50% or more. In the current bull market, about 35.9% of the circulating supply is less than 6 months old, showing that by contrast, a significant portion of coins are still firmly held by LTHs.

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holding a wave chart

Going back to the spending output age group (SOAB), this time we don’t look at all young coins, but only look at the selling behavior of LTH coins with a life span of more than 6 months. This graph shows us an increase in LTH selling, usually associated with a bull market rally or extreme volatility in a bear market.

Rising Sell: The price increased more than the previous ATH, and LTH realized profits in a strong market. SOAB said there was a major correction in prices (yellow) and an increase in spending.

Selling at the top: Compared to the previous two ups, the top of the last up was characterized by a decrease in LTH payouts, which indicates a new situation, will we be in the same situation this time?

Pullback Selling: After the first bear market drop from $20k to $6k, LTH sell reached an ATH as the price climbed back up to $10k, albeit at half the high .

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Old coins sold

In this recent correction, falling from $58,000 to $43,000, and now rising to an ATH of $61,300, the selling behavior of LTH is actually reminiscent of the peak stage in 2017. We can see that selling is decreasing over time, and to a lesser extent. In fact, in the entire bull market, the selling of LTH was significantly lower than the bull market in 2017.

The consumption behavior of LTH certainly has similarities with the late 2017 bull market. Remember, however, that history must be combined with the market dynamics of the time. For example, one development unique to this cycle is the explosive growth of crypto-finance, lending services, and derivatives markets (both centralized and decentralized) for hedging risk.

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Weekly Topic: Miners’ Income Shocks ATH

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Bitcoin Miner Revenue Chart

In the post-halving era, the total income of miners is usually about 1000BTC/day, which consists of block subsidies (about 900BTC/day) and transaction fees, which have been fluctuating between 75-125BTC/day.

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