What to know:

• Wallets that have held Bitcoin (BTC) for at least 155 days continue to sell off their coins. This activity is seen as a bullish indicator by analysts.
• The balance of Bitcoin on exchanges has been decreasing, signaling a potential supply shortage. However, this data may be influenced by other investment vehicles like ETFs.

If stock market investors were reported to be selling their investments, it might be a red flag for a market decline. Yet, in the crypto space, this selling behavior is interpreted as a sign of strength. Historical data shows that significant drops in the supply held by long-term Bitcoin holders tend to coincide with upward price spikes.

“Based on our analysis, sharp declines in long-term holder supply have frequently coincided with strong Bitcoin rallies. As long as long-term holders continue reducing their balances, Bitcoin remains at risk of a short squeeze to the upside,” said Markus Thielen, founder of 10x Research.

The total supply held by long-term holders has reached approximately 13 million BTC.

Recently, over 1 million BTC have shifted hands during the upswing above $100,000 as short-term traders stepped in to purchase from long-term holders.

“During the recent rally above $100K, 1.1M BTC have transferred from long-term to short-term holders, signifying a robust demand at prices exceeding $90K,” according to Glassnode in its latest report.

It is essential to note that the rate at which long-term holders are selling has now decelerated compared to earlier in the month, hinting at a more cautious selling strategy.

BTC long-term holder supply

The number of BTC stored in the wallets of centralized exchanges has fallen to 2.7 million, down from over three million six months ago. This draining of Bitcoin from exchanges is generally considered bullish.

“While many see this as a supply shock due to a mass withdrawal, we believe that much of this decrease is attributable to the coins being reorganized into ETF wallets controlled by custodians like Coinbase,” Glassnode remarked.

Overall, the exchange balance adjusted for coins shifting into alternate investment platforms currently stands at more than 3 million BTC.