In the analysis conducted by Philip Swift, creator of LookIntoBitcoin, it has been observed that Bitcoin’s on-chain spending is following a pattern similar to previous BTC price cycles, indicating the first stage of a bull market. As BTC’s price has more than doubled in 2023, the velocity of on-chain spending has increased, suggesting profit-taking activity among long-term BTC holders.
The analysis utilizes the Value Days Destroyed (VDD) Multiple, derived from the Coin Days Destroyed (CDD) metric, which measures the periods of inactivity when BTC moves on-chain. The VDD Multiple compares the 30-day result with the 365-day average, factoring in the current BTC price. When older coins start entering the market for sale, it indicates that longer-term participants are looking to capitalize on rising prices in major bull market cycles.
The current VDD Multiple stands at 1.32, slightly below its peak of 1.37 recorded in April 2023. Swift considers this as a clear indication of the “1st stage bull market.” Checkmate, lead on-chain analyst at Glassnode, also finds these findings remarkable and highlights the consistency of human behavior in response to similar stimuli across different market cycles.
Furthermore, data from Glassnode reveals that both long-term holders (LTHs) and short-term holders (STHs) of Bitcoin are currently in a profitable position. LTH coins, which have remained dormant for at least 155 days, are collectively worth 1.52 times their value when they were last moved. Similarly, STH coins show a value increase of 1.12 times.
These metrics indicate that various classes of hodlers may be tempted to cash out their holdings at current prices. Previous reports have already highlighted the influence of STHs on Bitcoin’s price action.
It is important to note that this article does not provide investment advice or recommendations. Readers are advised to conduct their own research and assessment before making any investment decisions.