A significant portion of the circulating Bitcoin—approximately 75%—has remained dormant for over six months, as revealed by recent on-chain data. This growing trend of long-term holding underscores a steadfast commitment among investors, despite the cryptocurrency experiencing a 21% decline from its all-time high.

Glassnode’s hodl wave chart, which leverages blockchain analytics to track the duration Bitcoin (BTC) remains in wallets, indicates that nearly three-quarters of the total supply has been stationary throughout most of 2024. This prolonged immobility suggests that a majority of holders view Bitcoin as a store of value, likely in anticipation of future price appreciation.

The persistence of this holding behavior is tightening the supply of Bitcoin available for trading, which could potentially drive prices higher as demand escalates and the available supply dwindles.

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In a recent X post dated August 19, on-chain analyst James Check noted that over 80% of short-term Bitcoin holders are currently underwater, having acquired their BTC at prices higher than the current market value. This precarious position raises concerns about the possibility of panic selling, reminiscent of similar downturns in 2018, 2019, and mid-2021, where fear-driven sell-offs exacerbated bearish trends.

Market sentiment remains overwhelmingly bearish, with the Crypto Fear & Greed Index registering a score of 28, indicating deep fear—a level not witnessed since December 2022. Although Bitcoin prices briefly surpassed $60,000 over the weekend, they have since experienced a sharp retreat, currently hovering around $58,619.

As the market navigates this uncertain terrain, the dichotomy between steadfast long-term holders and vulnerable short-term investors will likely play a pivotal role in shaping Bitcoin’s near-term trajectory.