The decline in the supply of Long-Term Holders (LTH) in August 2025 is a significant signal, indicating a major shift in market structure. Typically, LTH (addresses holding BTC for more than 155 days) are considered "smart money" and their behavior often predicts cycle peaks or bottoms.
Below is an analysis of this situation and why it breaks historical cycle patterns:
1. Current LTH supply status in August 2025:
In August 2025, on-chain data showed a strong wave of distribution (selling) from long-term investors.
Decline: Long-Term Holder supply has decreased to its lowest level in months (about 14.1 million BTC at the end of the year, starting from a sharp downward trend in August).
Behavior: Instead of hoarding like traditional accumulation phases, LTH took advantage of high prices (when Bitcoin was fluctuating above $100,000) to take profits.
2. Why are historical cycle patterns broken?
In previous cycles (2012, 2016, 2020), Bitcoin typically followed a 4-year rule tied to the Halving event. However, 2025 witnessed groundbreaking changes:
Participation of financial institutions (ETFs): The emergence of Spot Bitcoin ETFs has created stable demand and absorbed supply from LTH. Financial institutions buy not based on individual "HODL" sentiment but on portfolio allocation, blurring the lines between short-term and long-term holders.
Peak price earlier than expected: Bitcoin surpassed the previous all-time high (ATH) and reached $120,000 in mid-2025, earlier than the usual growth trajectory of previous cycles (which typically peak at the end of the second year after Halving). This prompted LTH to sell earlier to optimize profits.
Higher liquidity: The current market has deeper liquidity thanks to derivative products and widespread acceptance, making the "dumping" of large wallets not cause 80% crashes as before.
3. Impact on the market:
Main driver: Retail investors. Financial institutions & ETFs.
LTH behavior: Hold tight until the bubble bursts. Take proactive profits when reaching price targets.
Decline level: 70% - 80% from the peak. Shallower (about 25% - 30%).
Observation: The reduction in supply from LTH does not necessarily mean the market is "crashing", but it indicates that Bitcoin is transitioning from a high-risk speculative asset to a more mature financial reserve asset.
Content is informational and analytical, not investment strategy advice.
