Bitcoin traders’ sentiment shift points to next step in BTC halving cycle

Bitcoin’s (BTC) four-year cycle, closely tied to its halving events, is widely seen as a pivotal element in BTC’s annual price escalation. Within this overarching structure, traders anticipate distinct phases: accumulation, sharp price surges, and subsequent downturns.

During the four-year span, shorter cycles also surface, often influenced by changes in market sentiment and the activities of both long- and short-term holders. These cycles, crafted by the psychological behaviors of market players, can offer clues about Bitcoin’s future movements.

Whales gobble up Bitcoin as markets pull back

Long-term Bitcoin holders—those who maintain their investments for three to five years—are frequently viewed as some of the most experienced participants in the market. Generally possessing greater wealth and expertise, they can endure prolonged bear markets and are inclined to sell near local peaks.

Recent data indicates that long-term holders distributed more than 2 million BTC across two notable waves during the ongoing cycle. Each wave was succeeded by significant reaccumulation, which helped mitigate sell-side pressure and fostered a more stable price environment. At present, long-term holders are entering a new accumulation phase, with their combined wealth rising sharply by nearly 363,000 BTC since mid-February.

Another notable group within the Bitcoin ecosystem is comprised of whales—addresses that hold over 1,000 BTC. Many of these individuals are also long-term holders. Leading this faction are the mega-whales, each possessing more than 10,000 BTC. Currently, there are 93 such addresses, and their recent actions suggest ongoing accumulation.

Data shows that large whales reached a near-perfect accumulation score (~1.0) in early April, indicating a strong buying spree over a 15-day window. Although this score has since relaxed to ~0.65, it still reflects consistent accumulation trends. These substantial holders appear to be acquiring assets from smaller groups—specifically wallets containing less than 1 BTC or those with under 100 BTC—whose accumulation scores have dropped to around 0.1-0.2.

This change signals a growing transfer of holdings from retail to larger entities, indicating potential future price support, as whales typically hold onto their assets for extended periods. Often, this also precedes bullish market phases.

The last time mega-whales recorded a perfect accumulation score was in August 2024, when Bitcoin was valued at nearly $60,000. Just two months later, BTC surged to $108,000.

Short-term holders react sensitively to market sentiment

Short-term holders, typically defined as those who possess BTC for 3 to 6 months, display different behavior patterns. They are more likely to sell during market corrections or periods of uncertainty.

This behavior also adheres to a discernible pattern. Data indicates that spending levels generally fluctuate roughly every 8 to 12 months.

Presently, the spending activity of short-term holders is at a historically low level, despite a volatile macroeconomic backdrop. This implies that many recent Bitcoin buyers are opting to retain their assets rather than engage in panic selling. However, if Bitcoin’s price were to decline further, it’s likely that short-term holders would be the first to sell, potentially exacerbating the downturn.

Markets are ultimately driven by human behavior. Emotions such as fear, greed, denial, and elation do not just affect individual choices—they influence entire market trends. This is why recognizable patterns often emerge: bubbles expand as greed takes hold and then burst amid panic selling.

A well-known metric, the Fear & Greed Index, encapsulates this cycle effectively. This index, based on various market indicators, typically oscillates every 3 to 5 months, shifting from neutral to either greed or fear.

Since February, market sentiment has lingered within the realms of fear and extreme fear, further intensified by geopolitical tensions and downturns in the global stock markets. Still, human psychology tends to follow a cyclical pattern, suggesting that a return to a “neutral” sentiment could be on the horizon within the next 1-3 months.

One of the most intriguing aspects of market cycles is their capacity to become self-fulfilling. When enough participants subscribe to a particular pattern, they begin to act accordingly, cashing out at expected peaks and buying at anticipated lows. This collective behavior reinforces the cycle and contributes to its longevity.

Bitcoin serves as an illustrative example. Although its cycles may not adhere to precise timing, they display a consistent rhythm that shapes expectations and, in turn, actually influences market reality.

This piece is not meant to provide investment advice or recommendations. Every investment decision carries risks, and readers are encouraged to conduct their own research prior to making choices.