Bitcoin May Be Entering ‘Phase 2’ of Historic Bull Pattern, Says On-Chain Data

A fresh analysis of Bitcoin's on-chain data suggests that BTC might be following a familiar pattern seen in previous bull cycles, potentially signaling the start of a new growth phase.

Bitcoin Entering Phase 2 of Bull Run?

According to an analyst from CryptoQuant, Bitcoin’s recent behavior resembles the trend observed during the 2017 bull cycle. This pattern is based on the behavior of long-term holders (LTHs), a crucial group in the BTC ecosystem, who tend to keep their holdings for extended periods. LTHs are often seen as the “diamond hands” of Bitcoin, generally resistant to selling, even during periods of price fluctuation. Short-term holders (STHs), on the other hand, tend to hold for less than 155 days and are more prone to quicker trades.

Historical Trends in Long-Term Holder Supply

Looking at recent trends, the Bitcoin LTH supply experienced a decline during the rally earlier this year, as even committed holders took profits. This distribution phase saw some coins move into the hands of STHs, as LTHs began transferring tokens on the blockchain.

However, the data now shows a shift back toward accumulation by LTHs. But, with Bitcoin’s latest price surge, there are signs that the LTH supply may again begin declining, signaling the potential start of “Phase 2” in the current bull cycle. A similar trend occurred in 2017, where an initial wave of distribution by LTHs was followed by accumulation, then a second phase of distribution as the rally intensified.

Other Indicators Show Similar Patterns

The current data isn’t limited to LTH supply. Another key metric, the Bitcoin Binary Coin Days Destroyed (CDD), is showing signs that align with this pattern. The CDD indicator reflects the level of activity among HODLers based on the historical average of coins being sold. As noted, the 152-day moving average of this metric appears to be repeating a breakout similar to what occurred just before the 2021 bull run.

This combination of factors suggests a potential “Phase 2” for the current Bitcoin rally, where new capital enters the market, buying up supply from long-time holders. If the pattern from previous cycles holds, this could be a signal of further price action in Bitcoin’s favor.

With Bitcoin approaching a key resistance level, it will be essential to see if these signals play out as expected, setting the stage for another major leg in its growth journey.