Long-Term Holders' Net Position Begins to Rise After Two-Month Decline

Crypto KOL Murphy posted on X that the net position of long-term holders (LTH) has started to increase after nearly two months of continuous decline. The underlying logic includes two points: firstly, there is a decrease in distribution and an increase in accumulation among LTHs; secondly, short-term holders (STH) are also reducing frequent trading and gradually joining the ranks of LTHs. This situation is likened to two faucets, where the one releasing water is slowly being tightened, and the one allowing water in is being opened, causing the 'water level' to gradually rise. The first point is due to LTHs having completed significant distribution at the peak and early stages of decline (over 5 million units), resulting in diminishing profits from continued selling and reduced motivation. The second point is attributed to low market sentiment, with speculative funds exiting and liquidity reaching a freezing point. Data indicates that during bear market sentiment, LTH net positions decline rapidly, often accompanied by a swift drop in BTC prices. Conversely, when LTH net positions begin to rise, it usually leads to more stable market conditions. From a trading perspective, Murphy suggests that using high leverage or engaging in short-term trading at this point may not be cost-effective, as mistiming can lead to repeated erosion of capital. Instead, patiently waiting for opportunities to establish long-term spot positions is more suitable, with psychological preparation being relatively easier.