Is a surge in long-term holdings a 'trap'?...Bitcoin's recovery ends if it can't break $80,000

▲ Bitcoin (BTC)

While the supply of Bitcoin (BTC) held by long-term holders has surged, an analysis suggests that this indicator does not necessarily mean an actual increase in investment demand. On-chain data appeared to show an increase in long-term holdings, but the explanation is that internal wallet movements by Coinbase last year distorted the indicator.

NewsBTC reported on May 24 (local time), citing an analysis by pseudonymous analyst Darkfost, that the increase in Bitcoin's long-term holder supply is difficult to interpret as a typical accumulation signal. Bitcoin had fallen below the psychological support level of $75,000 over the weekend before partially recovering, and at the time of writing, it was attempting to recover to $77,000.

Darkfost explained, based on CryptoQuant data, that the supply of long-term holders increased from 15 million BTC to 15.8 million BTC in recent days. However, he pointed out that this increase is more related to Coinbase's large-scale internal movement in November last year than to new purchases by investors or strengthened conviction.

From November 22 to 23 last year, Coinbase moved 800,000 BTC between its internal wallets. At the time, this was worth approximately $70 billion. Darkfost analyzed that this maintenance-related movement distorted several on-chain indicators by eliminating existing long-term held unspent transactions and creating new data.

He stated, “As a result, datasets on various platforms reflected this movement, affecting UTXO-based indicators, age and value cohorts, short-term and long-term holder cost bases, realized value, and trading volume.”

May 23 marked six months since Coinbase's Bitcoin movement. The Bitcoin moved at that time fully transitioned from short-term holder supply to long-term holder supply, making it appear as if long-term holdings had suddenly increased. While an increase in long-term holder supply typically signifies accumulation by experienced investors and strengthened conviction, this signal does not directly reflect an actual increase in investor demand.

In terms of price, the area around $80,000 was presented as a key resistance level. Darkfost analyzed that Bitcoin's price is facing strong resistance just above $80,000, based on the average cost basis of short-term holders. This indicates that short-term investors are choosing to cut losses rather than wait for a rebound, which appears as selling pressure around the average cost basis.

At the time of writing, Bitcoin was trading at approximately $76,490, up 1% over the past 24 hours. The analysis suggested that Bitcoin must consistently break above $80,000 to continue its recovery trend.

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