Bitcoin Rally May Not Have Hit Top Yet, Here’s Why

newsbtcPublished on 2023-05-04Last updated on 2023-05-04

Abstract

The historical pattern in this Bitcoin on-chain indicator may suggest that the ongoing rally hasn't reached its top yet. Bitcoin 1-Year Inactive Supply Has Continued To Go Up Recently According...

The historical pattern in this Bitcoin on-chain indicator may suggest that the ongoing rally hasn’t reached its top yet.
Bitcoin 1-Year Inactive Supply Has Continued To Go Up Recently
According to a post from the on-chain analytics firm CryptoQuant, the 1-year inactive supply hit a high back in March of this year. The “1-year inactive supply” is an indicator that measures the total percentage of the Bitcoin supply that hasn’t moved on the blockchain since at least one year ago.
This supply belongs to one of the two major cohorts in the BTC market: the “long-term holders” (LTHs). This group includes all investors who bought their coins more than six months ago, so the 1-year inactive supply metric doesn’t measure their entire supply, only a segment of it (although a rather large one).
The LTHs hold a special place in the Bitcoin economy as they comprise the most resolute investors in the market. The selling and buying behavior of this cohort can, therefore, have long-term implications for the sector.
Here is a chart that shows how the 1-year inactive BTC supply has changed over the lifetime of the cryptocurrency and how it has seemingly taken its place in the different price cycles:

Looks like the value of the metric has been on the rise in recent days | Source: CryptoQuant
As the above graph shows, the Bitcoin 1-year inactive supply has historically trended up during the bear markets. The percentage of the circulating supply held by this Bitcoin investor segment hit an all-time high just back in March of this year, reaching a value north of 67%. These investors have shed some coins since then, but the difference in their supplies between then and now is negligible (13.1 million BTC vs. 13 million BTC).
The April 2019 rally, which resembles the current one, also saw the LTHs holding tight until midway through the rally, when they started selling, and the cryptocurrency reached the top just a while later.
Suppose the Bitcoin price and the 1-year inactive supply will follow the same pattern in this current rally as during all these past bullish periods. In that case, it seems likely that the top hasn’t been hit since the LTHs haven’t started participating in any significant distribution yet.
BTC Price
At the time of writing, Bitcoin is trading around $28,300, down 4% in the last week.

BTC has gone stale in the past day | Source: BTCUSD on TradingView

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