Long-Term Bitcoin Holders Spending BTC: A Bullish Signal, Analysts Say

Long-term Bitcoin holders, often seen as the backbone of the cryptocurrency's stability, have been spending their BTC in recent weeks, a trend that analysts believe signals a bullish market sentiment. This shift in behavior, as indicated by various on-chain metrics, suggests that investors are confident in Bitcoin's long-term prospects and are taking advantage of recent price increases to secure profits.



One key metric highlighting this trend is the Value Days Destroyed (VDD) Multiple, which compares near-term Bitcoin spending behavior to its yearly average. According to Glassnode data, the VDD Multiple has undergone an "epic cooldown" over the past few weeks, indicating that long-term holders are accumulating rather than spending their BTC. This cooldown suggests that old coins have stopped moving on-chain, allowing breathing space for new demand bids to hit the lack of supply. Long-term holders need higher prices to motivate sales, suggesting that they are holding onto their BTC until the price appreciates.



Another indicator of long-term holder behavior is the Long-Term Holder (LTH) Supply, which represents the amount of Bitcoin held by investors who have kept their coins for more than 155 days. Although the current LTH Supply is slightly below its all-time high, it remains high, signaling strong long-term conviction. However, the Long-Term Holder Net Position Change metric shows a downward trend, indicating that BTC from long-term holders is moving on-chain, potentially signaling the early stages of a bull run.



Analysts attribute this spending behavior to profit-taking, market sentiment, and the Bitcoin's Value Days Destroyed (VDD) Multiple. Long-term holders may be motivated to sell their BTC when the price appreciates significantly above their average cost basis. Additionally, short-term holders (STH) tend to buy more during price upswings, driven by fear of missing out (FOMO), which can encourage LTH to take profits. Furthermore, the Bitcoin's illiquid supply, which measures the amount of supply held in wallets with minimal history of spending, is at an all-time high, indicating that investors are continuing to withdraw their coins from exchanges and into custody, further tightening the supply.



In conclusion, the spending behavior of long-term Bitcoin holders, as indicated by various on-chain metrics, suggests a bullish market sentiment. While this trend may lead to short-term market instability, it ultimately signals investors' confidence in Bitcoin's long-term prospects. As long-term holders continue to accumulate during price declines and short-term holders buy more during price surges driven by FOMO, the market remains positioned for a potential rebound. However, traders and investors should closely monitor market dynamics, as new holders becoming more entrenched in the Bitcoin ecosystem could potentially increase short-term volatility.