Long-term holders stopped spending their coins after a sell-off in the cryptocurrency market
While Bitcoin is still consolidating around the first resistance levels seen since the reversal from around $28,500, the on-chain metric shows a new all-time high of 4.45 million BTC unchanged for over five years, according to glass knot.
The supply of long-term holders is one of the best metrics to determine the sentiment of long-term investors and those who view Bitcoin as a store of value rather than a speculative asset.
The increase in idle supply could suggest that Bitcoin has actually entered an accumulation phase after an active distribution since November. According to the graph, we have seen a strong decrease in idle supply in the middle of 2021 so far.
Why is the inactive offer important?
The number of inactive coins on the network could serve as both a social and a market indicator. As mentioned, long-term holder sentiment is easy to determine, but additionally, the Bitcoin Supply Last Active 5+ years ago may reflect the pressure being exerted on the market.
The decrease in the number of idle coins on the network usually correlates with bearish market trends, as even long-term holders abandon their coins to avoid losses or to break even on their positions.
The highest spend rate of long-term supply is usually seen around the highs of a rally or during a market sell-off, when panic reigns among all types of investors.
With long-term supply spending normalizing, we saw an almost immediate return to Bitcoin, which gained more than 10% from its value last week. Unfortunately, the rally slowed down as Bitcoin failed to reach the 50-day moving average.