Bitcoin: New holdings spike; good news ahead?

• Bitcoin supply transacted in the last three months increased from 11.5% to 21.4%.
• The overall supply held for less than six months declined sharply in May.

Several analyses centered on Bitcoin [BTC] of late have unanimously agreed that the king coin was in the middle of an accumulation phase, with most long-term holders exhibiting a lack of desire to sell their holdings.

However, a recent study by Glassnode revealed that this trend might be nearing its inflection point. The percentage of Bitcoin supply transacted in the last three months increased from 11.5% to 21.4% in May, an exponential increase of 86%.

This meant that there was a noticeable transfer of Bitcoin from longer-term investors to newer participants, suggesting bullish market trends.

The 1d-3m #Bitcoin Realized Cap HODL Waves has increased from the cycle low of 11.5%, to a current value of 21.4%, an 86% increase.

This suggests that the transfer of wealth from experienced holders to newer demand is occurring, a phenomena common across cycle inflection points. pic.twitter.com/M6ibcjvynb

— glassnode (@glassnode) June 1, 2023

Bitcoin supply that is less than three months old is typically considered as highly mobile, liquid, and most likely to be spent during periods of volatile price swings. Also referred to as “young coins”, this supply increases in volume during a bull market phase when long-term holders start to sell and take profits. As indicated below, the supply swelled up considerably in May.

Source: Glassnode

But does that really mean “diamond hands” have locked in gains?

As per the graph below, BTC’s supply older than six months has grown from a share of 75% at the beginning of May to 78% at the time of writing, indicating the lack of willingness of long-term holders to sell.

Source: Glassnode

The answer lies here

According to Glassnode, the increase in coins younger than three months would occur only when coins older than three months are spent. As seen earlier, this transfer was not driven by coins older than six months, or the long-term holders of BTC.

This actually meant that the cohort that acquired the coins in the last 3-6 months set this off. As evidenced by the graph below, the overall supply held for less than six months declined sharply in May, confirming that capitulation happened in the 3-6 months age band.

Source: Glassnode

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Bitcoin: Retail investors drive demand

Interestingly, there has been a sharp increase in retail investors for Bitcoin. Data from Santiment showed that wallets holding less than 10 coins mushroomed in May, most probably driven by Ordinals and BRC-20 token frenzy.

It could thus be possible that most of these new investors were part of the 1D-3m age band, as discussed earlier.

Source: Santiment