In the on-chain data analysis, we call the on-chain entities that hold coins for more than 155 days long-term holders (LTH); why 155 days, and not other times? Because according to big data statistics, BTC that has not moved in 155 days is less likely to move in the short term. On the contrary, BTC that has moved in 155 days is more likely to move again in the short term.

As the diamond hand in each cycle, LTH is the biggest beneficiary in the market. The behavioral characteristics of these entities are also an important factor in determining the conversion of bull and bear cycles. We can observe the mystery through several sets of data.

Data 1: Realized price change rate for long-term holders

In the previous tweets, we learned that the realized price (RP) can be regarded as the average turnover cost of the on-chain group. As shown in the figure below, from April 17 to date, the 7-day rate of change (blue signal) of the realized price (LTH-RP) of long-term holders has approached zero.

LTH-RP does not change, indicating that long-term holders have reduced their distribution during this period and they are no longer interested in participating in the current price. At the same time, the 7-day rate of change (red signal) of the realized price (STH-RP) of short-term holders is almost zero, proving that the current market has entered a "balanced period". Although there are few buyers, there are also few sellers. The last time such a "balanced period" occurred was when BTC fluctuated between $26,000 and $28,000.

Comparing the past two cycles (as shown below), before the bull market reaches the top, the change rate of LTH-RP will gradually increase (circled in yellow in the figure), accompanied by a surge in the change rate of STH-RP (circled in red). For example, 25% in 2018 and 20% in 2021 are both far higher than the current 8%. And then the change rate of LTH-RP will also surge (circled in green), which means that the last batch of diamond hands in this cycle have left the market, and the bull market has ended. Obviously, no similar signal has appeared yet.

Data 2: Realized market value of long-term holders

We have already learned about the concept of Realized Cap in detail in the previous post "Series 2". By observing the changes in LTH-Realized Cap and STH-Realized Cap, we can also observe the characteristics and rules of BTC cycle conversion.

As shown in the figure, LTH-Realized Cap (blue line) will get higher and higher after each cycle. The "rapid growth" of the blue line often occurs in the middle and late stages of a bull market (green arrow in the figure). The leading signal is that whenever STH-Realized Cap (red line) crosses the blue line (red arrow in the figure), this phenomenon will occur soon, which also means that the market has entered a major uptrend.

Once entering a bear market, until the next major uptrend begins, LTH-Realized Cap will be very stable (blue arrow in the figure), with almost no significant fluctuations, as if the blue line has been waiting for the red line to cross upward.

At present, LTH-Realized Cap is in a "stable period", and even the red line has not yet formed an upward cross, so how can we say that the bull market cycle has ended? Looking at the cross-cycle data, only when the red line completes the upward crossover, the bull market will enter the final sprint stage. Although this cycle is an "atypical" bull market, it will never be a "castrated" bull market.

Data 3: Long-term holder MVRV (LTH-MVRV)

LTH-MVRV can be used as a reference for market stage positioning and risk assessment. MVRV is the paper return held by investors relative to the cost benchmark. As the diamond hand of the market, LTH can obtain super high profit ratios in every bull market. For example, in 2018, LTH-MVRV reached a maximum of 29, indicating that LTH obtained a profit of 2800%; in 2021, LTH-MVRV reached a maximum of 9, indicating that LTH obtained a profit of 800%;

In order to make the data more intuitive, we do some visualization (as shown above):

1. When LTH-MVRV is higher than 1.5, an orange signal appears on the bottom signal bar, indicating that the current market has entered the mid-term bull market, and the risk level is "medium risk". At this stage, we mainly consider "holding";
2. When LTH-MVRV is higher than 3.5, the bottom signal bar shows a red signal, indicating that the current market has entered the late stage of the bull market and the risk level is "high risk". At this stage, we mainly consider "reducing holdings";
3. When LTH-MVRV is lower than 1, the bottom signal bar shows a green signal, indicating that the current market has entered the bottom of the bear market and the risk level is "low risk". At this stage, we consider "bottom fishing";

Obviously, we are still in the orange signal zone and it is not time to consider whether the bull market cycle has ended. Of course, the short-term rise and fall of the market is not within the scope of this article.

—— The end of the article ——