According to crypto analyst Yashu Gola, Bitcoin (BTC) has more room to fall. However, during the downtrend, BTC accumulation is in full swing. A Bitcoin on-chain indicator that tracks the amount of loss in the supply of cryptocurrencies held by long-term holders (LTH) suggests that a market bottom may be imminent. We have prepared Yashu Gola’s analysis based on metrics for our readers.
What does the Bitcoin LTH supply metric show?
cryptocoin.comAs you follow, BTC reached $69,000 ATH in November 2021. However, it’s now down to $19,000. About 30% of Bitcoin’s LTHs, as of September 22, suffered losses due to this drop. This is about 3-5% below the level that previously coincided with Bitcoin’s market bottoms. For example, in March 2020, the price of Bitcoin fell below $4,000 during the Covid-19-induced market crash that occurred when the amount of BTC supply held by LTH increased to 35% as shown below.
Similarly, Bitcoin’s low of around $3,200 in December 2018 agrees with the LTH loss metric, which has risen above 32%. In both cases, BTC/USD followed by entering a long bullish cycle.
Therefore, the number of LTHs lost during a typical bear market tends to peak in the 30-40% range. In other words, there is a possibility that Bitcoin will still fall (probably in the $10,000 – $14,000 range) for ‘losing LTHs’ to reach the historic bottom. Combined with the LTH supply metric, which tracks the BTC supply held by long-term holders, it shows that investors accumulate and hold during market downturns and distribute during BTC price uptrends, as shown below.
Therefore, it is possible that the next bull market will begin when the total supply held by LTHs begins to dwindle.
Bitcoin accumulation is strong
Meanwhile, the data shows that the number of savings addresses has been steadily increasing during the current bear market. The metric tracks addresses that ‘have at least two clean transfers and have not spent any money’.
Interestingly, this is different from previous bear cycles where accumulating addresses fell or remained stable. The chart above shows this. This suggests that ‘hodlers’ are unaffected by current price levels. Additionally, the number of addresses with non-zero balances is around 42.7 million, compared to 39.6 million earlier this year. It also shows consistent user growth in the bear market.
BTC price techniques point to more downsides
Bitcoin is still struggling to reclaim $20,000 in a higher interest rate environment. However, its correlation with US equities suggests further declines in 2022. From a technical standpoint, if the ‘cup and handle’ dump occurs, as shown below, it’s possible for Bitcoin to drop as low as $14,000 in 2022.
Such a move would likely push the aforementioned ‘LTH at loss’ metric towards the 32%-35% capitulation zone. So this is likely to eventually coincide with the bottom of the current bear market.
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