Bitcoin Could Now Be Entering Phase 2 Of The Bull Run

On-chain data shows Bitcoin could currently be following a similar pattern as in a previous cycle in terms of this indicator.

CryptoQuant data shows that Bitcoin is currently displaying a trend in an indicator that could be signaling the start of the second phase of the bull run.

Bitcoin Could Now Be Entering Phase 2 Of The Bull Run

In a recent CryptoQuant Quicktake post, an analyst has highlighted how the recent behavior of the Bitcoin long-term holder supply has brought to mind what was observed during the 2017 cycle.

The long-term holders (LTHs) are defined as one of the two main groups that the BTC userbase can be divided into based on holding time, with the other side being the short-term holders (STHs).

The cutoff between these two cohorts is 155 days, where investors who bought within this window are a part of the STHs, while those holding for more than it fall in the LTHs.

Related Reading | Bitcoin Sentiment Enters Danger Zone: Investors Now Extremely Greedy

Statistically, the longer an investor continues to hold onto their coins, the less likely they become to sell said coins at any point. Hence, the LTHs are considered to include the more resolute market participants.

Below is a chart that shows the trend in the combined amount of supply held by the participants of the respective Bitcoin groups.

As can be seen in the graph, the Bitcoin LTH supply saw a strong drawdown during the rally in the first quarter of the year, suggesting that even these diamond hands couldn’t resist the temptation of profit-taking.

Along with this decrease in the LTH supply, the STH supply went up, as whenever the LTHs transfer their tokens on the blockchain, they become part of the STH cohort instead.

Recently, the LTH supply had reversed this drawdown from earlier in the year, but with the latest rally to the new all-time high (ATH), the metric has again switched directions.

In the chart, the quant has highlighted how a similar pattern was also seen during the 2017 cycle; a first phase of distribution from the LTHs was followed by accumulation, which then led to a second phase of distribution.

Related Reading | Dogecoin Descending Triangle Could Hint At Next Destination For DOGE

It’s possible that the latest turnaround in the LTH supply is the start of the phase 2 distribution for the current cycle, where fresh capital flows in to take coins off the hands of the HODLers.

The LTH supply isn’t the only metric that’s showing a trend that matches that of the previous cycle. As the chart shared by the analyst shows, the Bitcoin Binary CDD is also forming an interesting pattern.

The Binary Coin Days Destroyed (CDD) essentially tells us about whether the HODLers are selling less or more than the historical average. From the graph, it’s apparent that the 152-day moving average (MA) of this metric may be showing a second breakout similar to the one that led into the 2021 bull run.

BTC Price

Bitcoin continues to be in ATH exploration mode as its price is trading around $75,900.