Which signals that major sell-offs have taken place.
A recent increase in short-term BTC holdings may be a sign of the "final flush" of sellers, which would mean that the capitulation events are over and the market is now ready for months of accumulation.
Glassnode, a market research company, reported in its most recent The Week On Chain report that short-term holders (STHs) have boosted their holdings by 330,000 BTC since the terrible LUNA crash in May. They may act as a kind of canary in the coal mine, pointing in the direction of a market recovery.
Short-term Bitcoin (BTC) holders started a new trend by purchasing incredibly cheap coins at or below $20,000 during the massive sell-offs that began in May through June, putting them in a "advantageous financial position."
The analysis suggests that the main drivers of the rising STH supply were exchange net outflows since May and an outflow of about 200,000 coins from long-term holders (LTHs). These factors all point to a capitulation, and the report claims that STHs "stepped in during the flush out, and now own coins with a substantially reduced cost base." STHs are wallets that have only held Bitcoin for 154 days or fewer. At 155 days, they attain LTH status.
STHs generally buy coins at or close to all-time high values then sell them for significantly lower prices because "extreme STH accumulation is typically synchronised with bull market topping forms." Glassnode asserted that buyers from May and June made a "positive divergence," defying the trend.
Such events, it continued, "describe a transfer of coins to new buyers whom are initially categorised as STHs, but have a low cost basis, and are in a favourable financial position to HODL from then on."
Whether the new STHs from May and June "have the conviction to hold on" and contribute to future price hikes is the next part of a market reversal that experts must consider, according to Glassnode.