“Long-short supply is an outdated metric,” Woo says.
Sales of OG bitcoiners are lower in this cycle than in previous ones.
Financial analyst Willy Woo questioned the validity of one of the most used metrics to evaluate the behavior of the bitcoin market: the supply of long-term holders (LTH).
According to the trader, This classification has become “obsolete” and leads to erroneous interpretations about the movements of veteran investors, known as OG bitcoiners.
«The term ‘long-term holder’ is a misconception. It is defined as any currency that has remained in one direction for more than five months,” he says. And he comments that “everyone is alarmed by a graphic with a misleading name.”
Woo believes that the fall in long-term supply in the markets rather reflects a “custody rotation.” That is, when bitcoin changes hands to new investors or are moved to corporate structures such as treasuries.
The analyst indicates that This phenomenon is even less in the current cycle than in the previous ones.
“The largest LTH supply drop was in 2017. In fact, it is a sign of strong bull markets,” he explains. And adds that There are now “much better ways to get signals” than LTH metrics.
This graph shows the supply of bitcoin in the hands of LTHs, who earn their name because they hold BTC for 155 days or more:
A popular metric
Woo’s criticism is not isolated, considering that this metric is widely used by on-chain analysis firms such as Glassnode. It is also presented by different companies and explorers, such as BitBo or CryptoQuant, for example.
This, since the indicator It is usually used to measure the distribution and spending of bitcoin in different periodsas has been widely reported in CriptoNoticias.
For example, in late October, we reported that LTHs were selling some of their funds, while exchange-traded funds (ETFs) and bitcoin treasuries were absorbing much of that supply, which was limiting the rise in the price of bitcoin.
However, the head of research at the analysis firm CryptoQuant, Julio Moreno, adds to the questioning about the use of this metric. For him, it is preferable to “look at the other side of the coin.” That’s why, proposes that the focus of the analyzes be on the demand side, and not on the side of long-term holders.
“For a few weeks now, demand has not absorbed supply at higher prices, and that is why the price has fallen,” he clarifies, destroying the idea that the movements of LTH are causing the recent drop in price.
Samson Mow, CEO of JAN3, and a reference in the Bitcoin community, also matches with Woo and Moreno, stating that he “doesn’t know any OG who is selling.”
Besides, criticizes unjustified fear in the marketwhich, in his opinion, was invented by the investors themselves.
«It’s incredible how fear can paralyze them. Focus on the big picture. “Bitcoin is going to add a zero, it is just a matter of time,” he emphasizes.