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Short-Term Sellers Drive the Ongoing Decrease: Bitcoin (BTC) on-Chain Analysis

2 mins
Updated by Valdrin Tahiri
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In Brief

  • More than 90% of the BTC currently being transacted previously moved less than one month ago.
  • The 1-2 year and 3-6 month bands are swelling.
  • Short-term sellers are in control.
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BeInCrypto takes a look at Bitcoin (BTC) on-chain indicators that relate to lifespan. More specifically, the Spent Output Age Bands and HODL Waves are analyzed.

Spent Output Age Bands

SOAB uses differently colored bands to show the age when the previous unspent transaction output (UTXO) for BTC was created. For example, the bands of 3m-6m shows current BTC transactions whose UTXOs were created between 3-6 months earlier.

Darker colors (purple) are used to represent BTC who previously moved a long time ago. In contrast, lighter colors are used to present BTC that previously moved in the short-term. 

Long-term bands usually spike in the first bounce after the market cycle is complete. This was visible on Feb 2018 (black circle), when BTC rallied from $6,000 to $12,000, after the market cycle was completed near $20,000. 

A similar but less pronounced occurrence transpired in May 2021 (gray circle), after BTC began its descent from $60,000.

Currently, more than 90% of the BTC that is being transacted previously moved between less than one month ago.

Therefore, it is mainly short-term sellers that are driving the ongoing downward movement.

HODL Waves

The HODL wave shows the ratio of the BTC that has moved in a specific time period. So, if the HODL wave band of 1-2 months has a range of 15%, it means that 15% of the total BTC supply last moved 1-2 months ago.

The main difference with SOAB is that the former measures when the previous BTC transaction occurred, while the latter shows the ratio of BTC moved in a specific time period, divided with the total supply of BTC.

In the case of the HODL wave, short-term bands spike close to a significant market cycle top. This was visible in the 2013, 2018 and 2021 market cycle tops (black circles), but less so on the Nov all-time high (white circle).

An interesting short-term development, is the increase of the 3m-6m band, which has occurred as a direct result of the decrease of the 1m-3m band.

What this means is that entities that purchased BTC 1-3 months earlier (black circle) are not selling, rather holding, which has caused their coins to mature into the 3m-6m band.

Between Oct 2021 – Jan 2022, the BTC price was between $43,000 and $67,000. Therefore, these entities are holding at a loss rather than selling.

Another fascinating development is the swelling of the 1y-2y band, as a result of the decrease from the 6m-12m band. 

Similarly to the 1-3m bands, the majority, though not all, of these entities are holding at a loss rather than selling.

For BeInCrypto’s latest Bitcoin (BTC) analysis, click here

Top crypto platforms in the US | February 2024

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Disclaimer

In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and ConditionsPrivacy Policy, and Disclaimers have been updated.

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Valdrin Tahiri
Valdrin discovered cryptocurrencies while he was getting his MSc in Financial Markets from the Barcelona School of Economics. Shortly after graduating, he began writing for several different cryptocurrency related websites as a freelancer before eventually taking on the role of BeInCrypto's Senior Analyst. (I do not have a discord and will not contact you first there. Beware of scammers)
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