I think the most important point in this chart may be that the ratio is rising very quickly and is now approaching the high levels seen in the past, at 4.6.
A rising LTH/STH ratio shows that the share of the BTC supply held by long-term investors is increasing relative to that held by short-term investors. In other words, a significant portion of the coins in the market is moving from short-term speculators into more patient hands or being held for a long time.
Currently, the ratio is 4.6, quite close to past highs. What’s more, this rise comes after Bitcoin fell from a peak of around $130,000 to $85,260.
Looking at previous periods in the chart, sharp rises in the LTH/STH ratio do not, by themselves, mean that Bitcoin is about to fall. On the contrary, in some periods the ratio has risen as the price prepared for a new uptrend. However, when the ratio approaches extremely high levels, it indicates that the market’s structure is changing and that the short-term supply is shrinking significantly.
When long-term investors continue holding BTC instead of selling, the liquid supply in the market decreases. If demand strengthens again, the price has greater potential to react upward. In that case, the area around $85,000 could become an accumulation zone, and BTC could try to move back into the $100,000–$110,000 range, then toward its previous peak. However, given the 4.6 level and the steepness of the recent rise, caution is warranted in the short term. BTC’s decline from $130,000 to $85,000 also shows that the market has undergone a significant repricing. $BTC #Bitcoin #BTC
A rising LTH/STH ratio shows that the share of the BTC supply held by long-term investors is increasing relative to that held by short-term investors. In other words, a significant portion of the coins in the market is moving from short-term speculators into more patient hands or being held for a long time.
Currently, the ratio is 4.6, quite close to past highs. What’s more, this rise comes after Bitcoin fell from a peak of around $130,000 to $85,260.
Looking at previous periods in the chart, sharp rises in the LTH/STH ratio do not, by themselves, mean that Bitcoin is about to fall. On the contrary, in some periods the ratio has risen as the price prepared for a new uptrend. However, when the ratio approaches extremely high levels, it indicates that the market’s structure is changing and that the short-term supply is shrinking significantly.
When long-term investors continue holding BTC instead of selling, the liquid supply in the market decreases. If demand strengthens again, the price has greater potential to react upward. In that case, the area around $85,000 could become an accumulation zone, and BTC could try to move back into the $100,000–$110,000 range, then toward its previous peak. However, given the 4.6 level and the steepness of the recent rise, caution is warranted in the short term. BTC’s decline from $130,000 to $85,000 also shows that the market has undergone a significant repricing. $BTC #Bitcoin #BTC