Bitcoin's short-term holders are at a crucial juncture, as evidenced by the recent BTC HODL Waves chart. This chart reveals a historical pattern where the decline in the share of short-term holders often leads to heightened price volatility for Bitcoin.
BTC HODL Waves Reveal Market Behavior
The BTC HODL Waves graph allows traders to monitor Bitcoin's price movement in relation to the distribution of coins held for varying durations. The white line on the graph indicates Bitcoin's price, which has risen from mere cents in 2009 to nearly $70,000 in 2024. The colored bands represent the percentage of BTC held for different lengths of time. Currently, most of the supply consists of short-term holders, represented by the red, orange, and yellow bands, which cover holders from less than a day to six months. Similar patterns were observed during peak bull markets in 2013, 2017, and 2021, when short-term holders increased as Bitcoin reached significant highs, followed by corrections.
Long-Term Holders Remain Resilient
Although short-term trading activity has started to increase, long-term holders — those holding BTC for more than one year — remain steadfast in their positions. The yellow to green bands, which signify holders having between one year and ten years, continue to hold dominance. Historically, when these holders began to sell into strength, it marked the distribution phase in the cycle. Their resilience so far indicates that the market still has room to grow before a major sell-off occurs. Interestingly, the more-than 10-year holder population is holding steady, indicating that some early adopters and institutional investors remain committed to holding their assets regardless of the price.
What’s Next for Bitcoin?
If historical patterns hold true, Bitcoin’s short-term holder dominance could serve as a warning signal for increased volatility. A rise in the STH supply typically precedes market corrections, as newer investors tend to sell when sentiment shifts. However, if long-term holders maintain their positions, BTC could still have the strength to reach new highs before a cooling-off period begins.
The data suggests that the behavior of short-term and long-term holders plays a key role in shaping Bitcoin's future trend. With the increasing share of short-term holders, significant price volatility is possible, yet the steadfast positions of long-term holders might support further growth.
