Bitcoin ‘Diamond Hands’ Halve Selling at $73.8K: Research

Bitcoin (BTC) “diamond hands,” or steadfast investors, are not behaving as if the peak price of $73,800 marked the zenith of Bitcoin’s value. A new investigation conducted by the on-chain analytics firm Glassnode on May 28 reveals that the current selling pressure from long-held coins is markedly lower than what was observed during the peaks of previous bull markets.

Those who have been holding Bitcoin for a lengthy period are showing resistance to the temptation to cash in on their profits, despite prices nearing the $70,000 mark. On average, these long-term holders (LTHs) are now seeing returns of approximately 3.5 times their initial investment. LTHs are not offloading their Bitcoin at a pace that would destabilize the ongoing bull market. Glassnode articulated this in its weekly newsletter, “The Week On-Chain,” stating that as prices increase due to buyer interest, the counteracting sell-side pressure from long-term holders also intensifies.

The firm elaborated that unrealized profit from these holders can indicate their incentive to sell, while realized profit signals the actual selling activity. LTHs are defined as wallets that have held incoming Bitcoin for at least 155 days, usually representing investors who are less speculative and more committed. Using the market value to realized value (MVRV) metric, Glassnode demonstrated that it won’t be long before LTHs move into historically high profit territory.

Typically, the transition from a bear market to a bull market sees the LTH MVRV ratio climbing above 1.5 but staying below 3.5, a phase that can extend over one to two years. Glassnode noted that if the price trend is sustainable and new all-time highs are achieved, the unrealized profit for LTHs will grow. This will create a stronger incentive for holders to sell, eventually leading to enough sell-side pressure to counteract buyer demand.

Considering the latest peak in March, the market harbors room for optimism if BTC price discovery continues. Even at its highest point of $73,800, the distribution from LTHs was less intense compared to previous bull market tops. During earlier bull markets, the net distribution rate from LTHs reached between 836,000 and 971,000 BTC per month. In contrast, the highest recent selling pressure peaked at 519,000 BTC monthly in late March, with around 20% of this originating from Grayscale ETF holders.

Glassnode highlighted the continued selling activity from investors in the Grayscale Bitcoin Trust (GBTC), an institutional investment vehicle that recently lost its leading position to other spot Bitcoin ETFs by assets under management. Looking forward, Glassnode expects LTHs to maintain this revived investment trend that has been noticeable since the end of the previous year.

Following significant sell-offs by long-term holders at the $73,800 all-time high, the sell-side pressure has considerably decreased. According to Glassnode’s conclusions, long-term holders have begun to re-accumulate Bitcoin for the first time since December 2023.

This trend points to an enduring belief in Bitcoin’s long-term value among its most dedicated investors. As the market continues to mature and new peaks are potentially reached, the behavior of these long-term holders will be crucial in shaping the landscape of Bitcoin trading and investing. Their actions indicate not just market dynamics but also underlying trust in Bitcoin’s future prospects.