This metric for long-term Bitcoin holders is approaching the “bottom zone” of BTC price

A Bitcoin (BTC) on-chain indicator that tracks the amount of coins held by long-term holders (LTHs) on losses is signaling that a market bottom may be near.

Eerily Accurate Bitcoin Bottom Pandit

On Sept. 22, about 30% of Bitcoin’s LTHs faced losses due to BTC’s decline from $69,000 in November 2021 to around $19,000 now. That’s about 3% to 5% below levels previously coinciding with Bitcoin’s market bottoms.

For example, in March 2020, bitcoin price fell below $4,000 amid the COVID-19 induced market crash, which took place when the amount of BTC supply held by LTH at a loss surged to 35% as shown below.

Bitcoin long-term holder supply in losses. Source: Glassnode

Similarly, Bitcoin’s December 2018 bottom of around $3,200 coincided with the LTH loss metric, which surged over 32%. In both cases, BTC/USD followed entry into a long bullish cycle.

Therefore, the number of LTHs that lose during a typical bear market tends to be in the 30% to 40% range. In other words, the price of bitcoin still has room for a decline – likely into the $10,000-$14,000 range – for “LTHs in Loss” to hit the historic low zone.

Coupled with the LTH supply metric, which tracks BTC supply held by long-term holders, it appears that these investors are accumulating and holding during market downturns and dumping during BTC price uptrends, as illustrated below.

Total bitcoin supply owned by LTH. Source: Glassnode

Therefore, the next bull market could begin when the total supply of LTHs starts to decline.

Bitcoin accumulation is strong

Data shows that the number of accumulation addresses has steadily increased during the current bear market. The metric tracks addresses that “have at least two incoming non-dust transfers and have never spent any money.”

Bitcoin number of accumulation addresses. Source: Glassnode

Interestingly, this differs from previous bear cycles where the number of accumulation addresses has decreased or remained flat as shown in the chart above, suggesting that hodlers are unfazed by current price levels.

Additionally, the number of addresses with a non-zero balance is around 42.7 million, up from 39.6 million earlier this year, showing consistent user growth in a bear market.

Bitcoin count of non-zero balance addresses. Source: TradingView

BTC price technicals are suggesting further downside

Bitcoin is still struggling to reclaim $20,000 as support in a higher interest rate environment. Its correlation with US stocks also points to further downside in 2022.

Related: Bitcoin Analysts Give 3 Reasons BTC Price Below $20,000 Could Be a “Bear Trap”

From a technical perspective, Bitcoin could fall further towards $14,000 in 2022 if there is a cup and handle collapse as shown below.

BTC/USD three day price chart with cup and handle pattern. Source: TradingView

Such a move should shift the aforementioned “LTH at a loss” metric toward the 32% to 35% capitulation region, which could ultimately coincide with the bottom in the current bear market.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.

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