BTC held by LTHs is at its most deflationary peak; what does it mean for STHs?

Bitcoin, the largest cryptocurrency by market cap, crossed $40,000 after a sudden surge. But soon returned to pre-peak price in less than two hours. At the time of writing, the largest cryptocurrency was trade at $40,200 up 4% in the last 24 hours. It is interesting to note that Bitcoin holders reacted very bullishly to this development.

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In this context, it is important to note that the total number of non-zero BTC addresses has increased since March 2018.

Notably, a sharp sell-off started in December 2018, which accelerated further in March 2019. However, Bitcoin defied the bearish trend.

It should be noted that according to Glassnode’s chart below, the number of addresses with a non-zero balance has increased sharply after 2019.

Source: Glassnode

In addition, the number of addresses with over 1,000 BTC and over 10,000 BTC varied widely. As of the 2021 census, it appears to have fallen somewhat.

Source: Glassnode

At addresses with more than 10,000 BTC (yellow), most of the increase occurred in September 2021. However, for those with more than 1,000 BTC (red), the majority of the increases occurred in early March 2022.

In fact, the BTC supply held by long-term holders (LTH) on its most deflationary stage in history. The LTH market inflation/deflation ratio suggested that Bitcoin was directly proportional to the long-term holders’ supply. On Chain researcher, David Puell shared this statistic on March 15.

Given the current geographic uncertainty, Bitcoin’s reign as a deflationary asset had soared. On the other hand, the USD suffered from the unprecedented rise in inflation of more than 4%.

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To further support this story, take a look at the table below:

Source: Twitter

The aforementioned plot sheds light on Bitcoin’s URPD activity. A huge chunk of Bitcoin supply changed hands between 38k and 39.5k. The last time this number of coins changed hands was between 3k and 4.5k during the Covid crash. Overall, it suggested that many investors jumped straight into the Bitcoin pool regardless of price.

To do this, crypto exchanges experienced a significant exodus of BTC last week. US-based crypto exchange giant Coinbase witnessed this outflow. According to data from glass nodeBTC held on Coinbase dropped more than 36% in the past two years.

This remains a strong signal that investors increasingly saw Bitcoin as a relevant asset in modern portfolios. You could interpret the aforementioned statistic as a positive sign for Bitcoin adoption.

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