On-chain data shows the Bitcoin “mid-term holders” have been selling, which may explain why the price has struggled recently.
Bitcoin Mid-Term Holders Have Been Shedding Their Supply Recently
As pointed out by an analyst in a CryptoQuant post, a holder group has been showing signs of profit-taking recently. The indicator of interest here is the “sum coin age distribution,” which tells us about how the Bitcoin supply is distributed among the various cohorts currently.
These cohorts are divided based on the age of the coins that they are holding in their wallets right now. The 1-3 months old group, for example, contains all the holders that have been carrying their coins since at least 1 month and at most 3 months ago.
In the context of the current topic, the relevant coin age group is the one with investors holding their coins since between 3 and 6 months ago. These investors are sometimes called the “mid-term holders,” since their range falls in the boundary of the “short-term holders” (STHs) and the “long-term holders” (LTHs).
The STHs and LTHs make up the two main sections that the Bitcoin market is generally divided into, and the cutoff between the two is whether the coins have aged 155 days or not. Naturally, coins with an age under 155 days old fall in the former group, while those with a higher age are included in the latter one.
Here is a chart that shows the trend in the sum coin age distribution for this specific cohort:
Looks like the value of the metric has been declining in recent days | Source: CryptoQuant
As displayed in the above graph, the Bitcoin sum coin age distribution for the 3-6 months old group started climbing around when the rally started back in January of this year.
This rise in the indicator continued until pretty recently, implying that the holders belonging to this cohort had been accumulating more of the cryptocurrency during this period.
After hitting a peak around the start of this month, however, the metric began to sharply decrease, suggesting that this cohort had started selling off their holdings.
When the mid-term holders had just started their selloff, the asset’s price had still been floating between the $28,000 and $29,000 levels. Since these holders acquired their coins at least 3 months ago when prices had been notably lower, all of this cohort is bound to have been at some significant profits at these price levels.
Following this profit-taking spree from the 3-6 months old group, the price of Bitcoin has registered a decline and has now fallen below the $27,000 level.
So far, the supply of the mid-term holders has continued to head downwards, so it may appear that their selling hasn’t stopped yet. This may provide an explanation behind the recent struggle that the asset’s value has had, as the coin has only really been able to move sideways in the last few days.
At the time of writing, Bitcoin is trading around $26,500, down 1% in the last week.
BTC has plunged over the past day | Source: BTCUSD on TradingView
Featured image from iStock.com, charts from TradingView.com, CryptoQuant.com