Bitcoin’s Crucial Mid-Cycle Reset: Long-Term Holder Supply Climbs to 14.3 Million BTC
Global, May 2025: A significant shift is unfolding beneath Bitcoin’s price surface. On-chain data reveals that long-term Bitcoin holders have increased their collective supply to 14.3 million BTC, marking a decisive return to accumulation after a period of distribution. This pivotal development, highlighted in a recent market update from cryptocurrency exchange Bitfinex, suggests the market is undergoing a crucial mid-cycle reset. While the 200-day moving average shows notable weakness, analysts interpret this as structural stress rather than a precursor to a full macro collapse, with trader focus now sharpening on the $67,000 to $65,000 liquidity zones.
Bitcoin’s Long-Term Holders Signal Renewed Conviction
The behavior of long-term holders (LTHs)—entities holding Bitcoin for more than 155 days—is a cornerstone of on-chain analysis. Their actions often signal underlying market sentiment that price charts alone cannot reveal. After months of declining supply, where LTHs collectively reduced their holdings, the reversal to accumulation is a critical data point. Reaching a supply of 14.3 million BTC indicates these seasoned investors are once again choosing to hold or add to their positions, often during periods of price consolidation or retracement. This pattern has historically preceded periods of renewed market strength, as it reduces the available liquid supply and demonstrates foundational confidence in Bitcoin’s long-term value proposition.
This accumulation phase is not occurring in a vacuum. It coincides with a period where Bitcoin’s price has retreated from recent highs, increasing volatility across the broader cryptocurrency market. The return of LTHs to buying or holding suggests they perceive current levels as offering strategic value. This behavior creates a potential support floor, as these coins are effectively removed from active trading circulation. Analysts compare this to similar accumulation phases observed in late 2020 and mid-2023, which laid the groundwork for subsequent upward price movements.
Analyzing the Weakening 200-Day Moving Average
Concurrently, Bitcoin’s 200-day simple moving average (200D SMA), a widely watched long-term trend indicator, has shown pronounced weakness. The 200D SMA acts as a barometer of the market’s macroeconomic health. A sharp decline in its trajectory, as currently observed, typically indicates sustained selling pressure or a lack of bullish momentum over an extended period. However, the critical distinction made by analysts is that this weakening is occurring without the hallmarks of a full-scale macro market collapse.
Historically, a breakdown below the 200D SMA, especially after a prolonged bull run, can signal a transition into a bear market. The current context is different. The stress on the moving average is being interpreted as a mid-cycle correction—a healthy and expected consolidation within a larger bullish trend. This phase allows the market to shake out over-leveraged positions, redistribute coins from short-term speculators to long-term believers, and establish a stronger foundation for the next leg up. The simultaneous LTH accumulation supports this “reset” thesis rather than a “breakdown” narrative.
- Technical Function: The 200D SMA smooths out price data to identify the long-term direction.
- Current Signal: Weakness indicates consolidation, not necessarily a trend reversal.
- Historical Context: Similar mid-cycle resets occurred in Q3 2020 and Q2 2023.
Liquidity Zones and Trader Psychology
Amid this structural reset, short-term price action is governed by liquidity. Traders are intently focused on the $67,000 to $65,000 range. These zones represent concentrations of limit buy and sell orders on major exchanges. The $65,000 level, in particular, is viewed as a major support area where significant buying interest may materialize. A sustained hold above this zone could reinforce the mid-cycle reset theory, while a breakdown would prompt a reassessment of market strength.
This focus on specific liquidity pockets highlights how modern cryptocurrency markets are driven by both technical analysis and on-chain fundamentals. The volatility spike across the market is a symptom of this transitional phase, as participants recalibrate their strategies based on the conflicting signals of LTH accumulation and moving average weakness. This environment often rewards patient, data-driven approaches over reactive trading.
The Broader Implications of a Mid-Cycle Reset
A successful mid-cycle reset has profound implications for the market structure. Firstly, it promotes healthier leverage levels across derivatives markets, reducing systemic risk from cascading liquidations. Secondly, it facilitates the transfer of assets from weak hands to strong hands, strengthening the overall holder base. Finally, it allows key on-chain metrics, like the MVRV Z-Score or SOPR, to revert to levels that have historically marked good long-term entry points.
For the wider cryptocurrency ecosystem, Bitcoin acting as a stable, consolidating base is often beneficial. It reduces correlation-driven panic and allows capital to flow into altcoins based on their individual fundamentals, rather than pure Bitcoin beta. The current data suggests the market is attempting to build such a base, with long-term holders providing the foundational confidence.
Conclusion
The convergence of Bitcoin’s long-term holder supply rising to 14.3 million BTC and a weakening 200-day moving average paints a picture of a market in a complex but potentially healthy transition. This mid-cycle reset represents a period of consolidation and redistribution, crucial for sustaining a long-term bullish trend. While heightened volatility and focus on key liquidity zones like $67K–$65K define the short-term landscape, the return of accumulation by the most committed cohort of investors offers a countervailing signal of underlying strength. The coming weeks will be critical in determining if this reset successfully builds a platform for the next phase of market growth, a process now being closely monitored through the dual lenses of price action and on-chain intelligence.
FAQs
Q1: What does “long-term holder supply” mean?
Long-term holder (LTH) supply refers to the total amount of Bitcoin held in wallets that have not moved their coins for more than 155 days. This metric is used to gauge the conviction and behavior of investors with a longer time horizon.
Q2: Why is a weakening 200-day moving average not necessarily bearish?
In the context of a strong prior uptrend, a weakening or flat 200-day moving average can signal a consolidation or “reset” phase. It allows the market to digest gains, reduce excess leverage, and build a new support base, which can be a precursor to continued upward movement.
Q3: What is a mid-cycle reset in cryptocurrency markets?
A mid-cycle reset is a period of price correction, consolidation, and volatility within a larger bullish market cycle. It serves to shake out speculative excess, transfer assets to long-term holders, and establish stronger technical support levels before the trend resumes.
Q4: How do liquidity zones like $67K–$65K influence trading?
Liquidity zones are price ranges where a high volume of buy and sell orders are clustered on exchange order books. They act as magnets for price action, often serving as key support or resistance levels where volatility can increase as these orders are executed.
Q5: What other on-chain metrics should be watched alongside LTH supply?
Key complementary metrics include the Net Unrealized Profit/Loss (NUPL), the Spent Output Profit Ratio (SOPR), and exchange net flows. Together, they provide a multidimensional view of investor profit-taking, selling pressure, and overall market sentiment.
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