Bitcoin’s [BTC] long-term holders (LTH) are beginning to change their behavior. This comes after accumulating at record levels, signaling a possible shift in the current cycle.
LTH supply recently turned lower after climbing toward 16 million BTC, while short-term holder supply remained comparatively subdued.
This trend is similar to previous cycles of LTH supply curves, which reflect how early on experienced investors sell part of their portfolios when prices rise.
That said, this cycle has developed differently. The first major price run-up was about 31 months long, compared to 8, 17, and 16 months from previous cycles.
Continued ETF inflows, institutional participation, and persistent whale accumulation likely delayed the next redistribution phase. Nonetheless, LTH supply remains near historical highs, suggesting profit-taking has only begun.
Therefore, the movement indicates long-term holders are now acting like participants once again, and thus the cycle is moving into its second distribution phase.
LTH/STH SOPR reinforces the trend
Adding to that shift in long-term holder behavior, the LTH/STH SOPR Ratio has also fallen close to 1, offering another perspective on the market’s current phase.
The narrowing profitability gap between long and short-term holders mirrors conditions seen around the 2015, 2019, and 2022 market bottoms, when capitulation and redistribution gradually transitioned into renewed accumulation.
As such, this further reinforces the recent slowdown in supply rate from LTHs. This trend suggests that there are many fewer speculative positions remaining within the markets.
However, the ratio has not yet fully entered its historical accumulation zone. Instead, Bitcoin appears to be approaching a region where accumulation, redistribution, and renewed demand have historically begun shaping the next stage of the market cycle.
Market sentiment diverges from on-chain signals
Market sentiment has yet to reflect those improving on-chain conditions. The Crypto Fear & Greed Index remains in Fear at 27, showing investors continue approaching Bitcoin cautiously despite strengthening blockchain fundamentals.
That caution stands in contrast to the supply held by LTH, near a record 16 million BTC. Moreover, the MVRV was compressing toward 1.21 to 1.22 at press time.
Historically, fear often lingers while on-chain fundamentals quietly improve, and this current divergence stands out rather than being contradictory. Yet, a single indicator does not confirm a bottom.
However, the convergence of restrained profitability, compressed valuations, strong long-term holder conviction, and persistent fear increasingly resembles the conditions that preceded previous Bitcoin accumulation phases.
Final Summary
- Long-term holders have started distributing after record accumulation, signaling the market is entering a new cycle phase.
- On-chain indicators increasingly align with historical accumulation conditions, even as broader market sentiment remains firmly in fear.
