Following the Smart Money: A Study of Long-Term Holders

One of the exciting prospects in on-chain analysis is the ability to visualize the tectonic forces of underlying supply and demand governing the Bitcoin market. For the first time in finance, we can observe the near real-time transfer of an asset from stronger to weaker hands in a bull run, the accumulation by long-term investors in a bear market, and the fluctuating profit-and-loss of entities day to day.

Within this newfound transparency is the symbiotic relationship between long- and short-term investors— a perpetual tug-of-war between high and low time preferences that characterizes unique phases of market cycles. By tracking the movement of supply between these two groups, we gain measurable insights that show us when macro trend shifts are underway.

First, let's define Long-Term (LTH) and Short-Term Holders (STH). Based on prior analysis, we determined that a coin becomes statistically unlikely to be spent once it crosses the 155-day mark, or approximately five months. Using this data point as a threshold, we delineate the two cohorts of Short-Term and Long-Term Holders.

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