Through daily data analysis, it is not difficult to find that no matter what we focus on, macro, expectations or emotions, it will eventually be reflected in supply and demand and determine price changes. By observing the visual data of supply and demand relationships, it can effectively help us grasp the critical point of trend change in the cycle. I will elaborate on this in detail in this article.

We all know that in every bull cycle of #BTC, long-term holders (LTH) will distribute chips to short-term holders (STH), so LTH plays the role of supply side and STH is the demand side.

The following figure is the change data of LTH and STH holdings, showing the changes in supply and demand in the past three cycles. When the STH holding curve (red waveform) rises, it means that the demand of short-term holders begins to rise; at the same time, the LTH holding curve (blue waveform) falls, that is, long-term holders begin to distribute and serve as the main seller pressure in the market. Through observation, it can be found that in each bull market cycle, the red waveform will have 2 peaks, which means that there will be 2 STH demand peaks in 1 cycle.

The top of the STH curve usually corresponds to the bottom of the LTH curve, so this also indicates that the selling pressure may reach the critical point of oversaturation (LTH distribution) and new demand is about to be exhausted (STH acceptance).

⭐ 2015-2018 Bull Market Cycle:
When the demand for STH starts to rise (see the red arrow in the figure), it is also the time when the market starts to enter the bull market from the bottom of the bear market. The first peak of STH demand happened around the halving day. The second peak of STH demand is the top area of ​​this cycle.

⭐ 2019-2021 Bull Market Cycle:
As in the previous cycle, when STH demand began to rise (see the red arrow in the figure), it was also the time when the market started to enter the bull market from the bottom of the bear market. The first peak of STH demand occurred before the halving day. The second peak of STH demand was also the top area of ​​this cycle.

⭐ 2023 Bull Market Cycle:
Unlike the previous two cycles, when the market started to enter the bull market from the bottom of the bear market, the demand for STH did not rise synchronously, but instead fell. And LTH did not start to be distributed (a feature of an atypical bull market).

This shows that from January to December 2024, STH did not sell its chips, and slowly turned into LTH over time, which is why the red line in the figure dropped, the blue line rose (see the yellow arrow) and the price rose; therefore, the early stage of this bull market grew in a low-liquidity environment with no distribution and no demand.

It was not until January 10 that the ETF was approved and the STH supply began to turn upward for the first time, starting to take over the distribution of LTH. This of course included Grayscale's reduction of 320,000 BTC and the increase of 530,000 BTC by several other ETF funds.

Coincidentally, the first peak of STH demand also happened to occur around the halving day, similar to the 2015-2018 cycle. From the data, the first peak of STH demand in each cycle will cause a certain degree of correction in the price of BTC, but this is only a part of the entire bull market cycle.

Another interesting discovery...

Although the amount of BTC distributed by LTH and taken over by STH in each cycle is not consistent, the ratio obtained by dividing it by the total circulation of BTC in the same period appears to be very regular in terms of data.

In order to observe this valuable discovery more intuitively, we make it into a table as follows:

⭐ 2015-2018 Bull Market Cycle:
The first demand started from October 3, 2015 to July 8, 2016. During this period, STH received a total of 1.31 million BTC, accounting for 8.4% of the total BTC circulation during the same period.

The second demand started from December 17, 2016 to December 16, 2017. During this period, STH received a total of 2.6 million BTC, accounting for 15% of the total BTC circulation during the same period;

⭐ 2019-2021 Bull Market Cycle:
During the first round of demand activation, STH received a total of 750,000 BTC, accounting for 4.2% of the total BTC circulation during the same period;

During the second round of demand activation, STH received a total of 1.96 million BTC, accounting for 10.5% of the total BTC circulation during the same period;

From the data, in the first two cycles of demand changes, the first STH took up a proportion of about 4%-8%, and the second STH took up a proportion of about 10%-15%. Moreover, the second demand proportion will be 1.8-2.5 times higher than the first.

⭐ 2023 Bull Market Cycle:
The first demand in this cycle is from December 3, 2023 to April 14, 2024. During this period, STH received a total of 1.16 million BTC, accounting for 5.9% of the total BTC circulation during the same period; it falls exactly between 4% and 8% of the above data conclusion, so this is a reasonable demand acceptance, and the passage of the ETF has not changed the law of market operation. Based on the above data analysis, we estimate that at the peak of the second demand, STH's acceptance will be about twice that of the first time, about 2.32 million BTC.

Therefore, we should have absolute faith and look forward to the second outbreak of STH demand in this cycle, which is the real top stage of the bull market and the most likely time period for the cottage season. At the same time, I also vindicate all the on-chain data analysts in the Chinese cryptocurrency circle. On-chain data is by no means a rigid and rigid method. As long as you are good at discovery, boldly assume and rigorously verify, it will be a valuable reference for trend traders.