LTH at Record Highs May Not Be Bullish

Bitcoin’s price saw a modest 2.55% increase in June, failing to surpass its May peak of $112,000. The cryptocurrency continues to trade within a narrow range, reflecting a period of consolidation, according to ARK Invest’s latest Bitcoin Monthly report.

A significant development highlighted in the report is the rise in long-term holders (LTHs), who now possess 74% of the total bitcoin supply — a level not seen in 15 years. This suggests a strong conviction among seasoned investors, even as the influx of new buyers diminishes.

However, the report also points to a decline in on-chain capital flows during the second quarter, as measured by the Market-Value-to-Realized-Value (MVRV) momentum metric. This downturn indicates a cooling in market enthusiasm and a potential shift in investor sentiment.

In the broader economic context, the U.S. dollar (as measured by the Fed’s Nominal Broad Trade Weighted Dollar Index) keeps climbing, defying the dominant narrative of dollar debasement that has fueled long-term bullish sentiment in crypto.

Meanwhile, inflation showed continued signs of easing, raising questions about bitcoin’s traditional appeal as an inflation hedge — though, on the flip side, lower inflation may also lead to lower federal funding rates, something that tends to boost risk-on assets like tech stocks and cryptocurrencies.

Housing appears to be a weak link, the report noted, highlighting a growing gap between elevated homeowner expectations and a sharp drop in home sales. This divergence hints at potential strain in consumer confidence and broader economic activity.