Bitcoin STH HODL Waves Signal End of Bear Market

The percentage of Bitcoin held by short-term holders is falling sharply, and this pattern repeats itself remarkably consistently at the end of every bear market. Onchain analyst Darkfost points to the STH HODL Waves data from CryptoQuant, which shows that this balance is currently reaching a negative extreme. Historically, that is a positive sign for the market.

In brief:

• The share of Bitcoin held by short-term holders is shrinking across all categories to a historic low.
• This pattern is visible at the end of every previous bear market and points to growth in the number of long-term holders.
• Demand for Bitcoin has not yet returned, which could mean a favourable moment for investors who enter patiently.

Bitcoin is available at OKX and Bybit.

Short-term holders are becoming increasingly scarce

The latest data shows that the share of the total Bitcoin supply held by short-term holders (STH) is declining across all time categories. Coins held for less than a day now represent just 1.2% of the total supply. Coins held for one day to a week stand at 2%, one week to a month at 5.6%, one to three months at 6.7% and three to six months at 8.1%.

Darkfost explains that every Bitcoin purchase creates a new short-term UTXO. When demand returns strongly, the share of short-term holders shoots up and that usually marks a market top. Now that this share is falling, it means the inflow of new buyers is stagnating and the market is cooling down.

Long-term holders take over

The flip side of this declining STH share is that long-term holders (LTH) are increasing relatively in number. Bitcoin held by LTH is moved much less quickly than coins held by short-term holders, who typically respond actively to price fluctuations. That makes the market more stable as the LTH share grows.

Bitcoin is currently at $64K. Darkfost states that the current pattern in the STH HODL Waves is identical to what we saw at the end of previous bear markets, as shown in the chart covering the period from 2013. Every time the STH share reached a low, a recovery period followed. Demand has not yet returned, but historically that is precisely the moment for long-term thinkers to build positions.