Diamond Hands: Short-Term Bitcoin Supply Reaches Historical Lows

Bitcoin’s short-term supply has started to reach historical lows, data shows. The cryptocurrency hasn’t seen such values since August 2015.

Short-Term Bitcoin Supply Hits A Low Of Just 16.16%

According to the latest Arcane Research report, BTC’s short-term supply is now the lowest it has been since August 2015.

The “short-term” Bitcoin supply here refers to the total amount of BTC last spent within the past three months. This metric shows how many short-term holders there are in the network. These are usually traders who are constantly changing their positions to maximize their profits.

All the supply that hasn’t moved in the last three months is considered the long-term supply. It highlights the number of long-term holders in the market. These “hodlers” keep their investments intact, believing that the price of BTC will show further appreciation in the future.

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Now, here is how the current short-term supply vs price chart looks like for Bitcoin:

The BTC short-term supply sharply drops down | Source: Arcane Research Report - Week 33

As the above graph shows, the indicator has made several peaks over the course of Bitcoin history that correspond with rises in the price. This makes sense as price hikes would make investors move some of the dormant supply for profit taking.

However, it has been different this time; the short-term supply hasn’t recovered at all since the May crash, despite the coin climbing to $50k. Other on-chain data also suggests that BTC’s activity has indeed dropped a lot.

Currently the value of the metric is 16.16% of the total Bitcoin supply, not far from the all-time low of 15.35% observed in August 2015.

What Could These Low Values Mean For BTC’s Price?

There could be two possible explanations for this trend in the Bitcoin short-term supply. The first is that the low activity is because of traders or investors no longer being interested in BTC so that they aren’t moving their investments into the coin despite the price rise.

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The above reason holding true would imply bearish signs for the market. The other narrative is more bullish; the market could just have more long-term investors now that don’t want to sell yet, they could be holding out for even higher prices.

Whichever it is, only time will tell. Further improvements in the price of the cryptocurrency will be of importance going forward. If the activity fails still to recover still, the bearish scenario might hold some weight.

At the time of writing, Bitcoin’s price floats around $47.8k, up 5% in the last 7 days. Over the past month, the cryptocurrency has gained 24% in value.

Below is a chart showing the trend in BTC’s price over the past three months.

BTC continues to fall down after the touch of the $50k level | Source: BTCUSD on TradingView