The Bitcoin (BTC) on-chain indicator, which tracks the number of coins that long-term coin holders (LTH) are holding at a loss, indicates that a market bottom may be near.
Frighteningly Accurate Bitcoin Analyzer
As of September 22, approximately 30% of Bitcoin LTH suffered losses due to BTC falling from $69,000 in November 2021 to around $19,000 currently. This is about 3-5% below the level that previously coincided with the bottom of the bitcoin market.
For example, in March 2020, the price of bitcoin fell below $4,000 amid the market crash caused by COVID-19, which occurred when the BTC supply volume held by LTH rose by a loss of around 35%, as shown below.
The long-term bitcoin holder suffered losses. Source: glassnode
Similarly, Bitcoin’s December 2018 bottom of around $3,200 is consistent with the magnitude of LTH losses exceeding 32%. In any case, the BTC/USD pair continued to enter a long bullish cycle.
Consequently, during a typical bear market, the number of unprofitable LTHs tends to peak in the 30-40% range. In other words, the price of bitcoin still has enough room to fall – it will likely hit the $10,000-$14,000 range – to “tap LTH” and reach an all-time low.
Coupled with the LTH supply metric, which tracks the supply of BTC held by long-term holders, these investors appear to accumulate and hold during market downturns and distribute during an uptrend in BTC prices, as shown below.
The total supply of bitcoins held by LTH. Source: glassnode
Therefore, the next bull market may start when the total supply of LTH starts to decrease.
Strong Bitcoin Accumulation
Meanwhile, the data shows that the number of accumulated titles is constantly increasing in the current bear market. Tracks metric addresses with “At least two incoming transfers with no dust and never spent money.”
Number of addresses to collect bitcoins. Source: glassnode
Interestingly, this is different from previous bearish cycles, when the number of accumulated titles fell or remained unchanged, as shown in the chart above, indicating that the “swindlers” are not concerned about current price levels.
In addition, the number of addresses with a non-zero balance is about 42.7 million compared to 39.6 million at the beginning of the current year, indicating a steady increase in users in a bear market.
Number of bitcoin addresses with a non-zero balance. Source: TradingView
Technical tips for the BTC price to fall further
However, Bitcoin is struggling to regain $20,000 as support in a higher interest rate environment. Its correlation with US stocks also points to further declines in 2022.
RELATED: Bitcoin Analysts Offer 3 Reasons BTC Price Below $20,000 Is a Bear Trap
Technically, Bitcoin could fall to $14,000 in 2022 if the cup and pen crash stops as shown below.
Three-day BTC/USD price chart with cup and handle pattern. Source: TradingView
Such a move should push the aforementioned LTH at Loss metric towards the 32-35% surrender zone, which could eventually bottom out in the current bear market.