Bitcoin (BTC): Dormant Coins on the Move Again – What's Next?
Key Takeaways
- Bitcoin’s monthly CDD/Yearly CDD ratio surged to 0.25, indicating increased distribution of dormant coins.
- BTC Long-Term Holder (LTH) distribution is unlikely to halt the rally but may slow it down.
Bitcoin (BTC) is trading within a consolidation range of $117k - $120k, prompting long-term holders to begin distributing their holdings. This means previously dormant coins are now entering the market, potentially impacting Bitcoin's price dynamics.
Dormant Bitcoin Holder Distribution Surges
According to CryptoQuant analyst Axel Adler, Bitcoin's monthly CDD/Yearly CDD ratio hit 0.25 on July 24, a significant level observed within the $104,000 to $118,000 price range. This surge is critical because it mirrors historical peaks seen in 2014 and during the 2019 correction.
In 2014, BTC plummeted 95% following the Mt. Gox scandal. In 2019, after rallying to $8,000, BTC corrected by 40% following China's crypto trading ban.
The recent CDD spike suggests that long-term holders are actively moving BTC into the market, signaling distribution by experienced participants.
This increased distribution is further evidenced by the declining Holder Net Position Change. Checkonchain data indicates that the Holder Net Position Change has remained negative over the past week, hitting a low of -134.7k BTC.
Concurrently, Bitcoin’s Long Term Holder Supply has decreased from 14.12 million to 13.88 million, a drop of 240k BTC. This substantial decline suggests that long-term holders are capitalizing on the rally to distribute their holdings.
Historically, increased distribution from long-term holders has often preceded price declines due to mounting downward pressure.
Institutional Demand Remains High
Despite the selling pressure from long-term holders, institutional demand for Bitcoin remains strong. Spot ETF inflows remain positive overall, with IBIT leading at $57.15 billion, followed by FBTC at $12.33 billion, signaling continued institutional accumulation.
Will This Hinder Bitcoin’s Rally?
Analysis indicates that Bitcoin is facing pressure from increased distribution by long-term holders, causing it to remain range-bound and struggle to reclaim its ATH of $123k. However, strong treasury demand and BTC-ETF inflows are providing significant support by absorbing the selling pressure.
Currently, this distribution is unlikely to halt the rally entirely but will likely slow its pace. If LTH distribution cools down, BTC may be strong enough to retest its ATH and potentially reach new highs.
Continuing the current trend, however, would mean further consolidation within the $115,000 - $120,000 range.
Disclaimer: This analysis is for informational purposes only and does not constitute financial advice. Trading cryptocurrencies involves risk.