Source: Golden Ten Data

At the beginning of March, Bitcoin's price trend resolutely broke through the historical high of the previous cycle, triggering a shift to the price discovery stage, and a large number of holders ended up profiting.

Bitcoin's previously lower cost base was re-evaluated and turned into a higher cost base. As these bitcoins change hands, this asset class will be injected with new demand and liquidity. This mechanism is accurately conveyed through the “realized market value” indicator, which is used to track the dollar liquidity “stored” in the Bitcoin asset.

Up to now, the market capitalization has reached a record high of $540 billion and is growing at an unprecedented rate (an average of $79 billion per month).

According to data from the on-chain analysis company Glassnode, 1,875,000 bitcoins (accounting for about 9.5% of the Bitcoin circulation supply) changed hands at the level of 60,000 US dollars.

The time limit between short-term investors and long-term investors in the chart is 155 days, which means that investors who bought Bitcoin in the past 155 days are short-term investors. As shown in the chart, most of the above $60,000 are mostly short-term investors. Of course, this also includes some long-term coin holders, commonly known as “diamond holders.” These are holders who bought during the 2021 bull market.

The purchase at this high level of $60,000 is partly due to the asset's recent sharp rise, fueling speculative sentiment in the market. Another reason is the flow of funds to Bitcoin spot ETFs, which are bought on a large scale at relatively high prices.

Dormant supply reawakens

Compared to short-term holders, long-term holders are generally considered the most stubborn part of the market because no matter what happens in the market, these “diamond players” won't sell easily.

However, recent data shows that these “diamond players” seem to have finally broken their silence as their supply continues to decline.

Currently, the supply gap between long-term holders and short-term holders continues to narrow. As prices rise and investors' profit holdings increase, it will continue to stimulate long-term holders to choose a profitable settlement.

The chart shows that since its peak in December 2023 (14.91 million units), the supply of bitcoins from long-term holders has declined by 900,000 units. One-third of these bitcoins (around 286,000) can be attributed to the Grayscale Bitcoin Trust (GBTC) outflow.

In contrast, the supply of short-term holders increased by 1.121 million, absorbing distribution pressure from long-term holders, and obtained 121,000 bitcoins through secondary market transactions.

We can observe this result by evaluating the ratio between long-term holders' and short-term holders' supply. As investors' primary behavior shifts from long-term holding to distribution, profit settlement, and speculation, all macro upward trends will decline significantly.

One key conclusion drawn from this observation is that

With the advent of new price highs, investor behavior patterns have clearly changed, and the distribution pressure on long-term holders will often accelerate to meet new demand for higher prices.

Although the newly approved US Bitcoin Spot ETF is an important new component of the market structure, these trends were visible in all previous cycles of on-chain data.

Currently, activity continues to rise. Overall, the transaction speed of Bitcoin, which has been dormant for a long time (the emphasis is on the speed of actual use), is exceeding the cumulative “holding time” of “diamond hands” holding coins. This shows once again that the market has changed its behavioral pattern to become a mechanism dominated by selling and profiting. This could inject new demand and liquidity into Bitcoin in the future.