This is how the Terra LUNA crash was for Bitcoin (BTC)

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The long-term supply of bitcoin has increased significantly since the implementation of Terra. This suggests that buyers saw value during and after the disaster.

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Crash Terra LUNA: Positive for BTC

The collapse of Terra, which lost $60 billion in value, has gone down in cryptocurrency history as a pivotal moment.

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TerraForm Labs co-founder Do Kwon claims the problem stems from weaknesses in the design of the UST stablecoin protocol. However, others have openly called the project a scam from the start.

The incident triggered a flight of capital that sent prices crashing across the board – and the market has yet to recover.

However, metrics on the Bitcoin blockchain show an interesting change in the dynamics of long-term Bitcoin holders as a result of the disaster.

At the end of March, bitcoin was trading at $47,000, continuing to move despite early warnings of a spike in inflation and further escalation of troubles in Eastern Europe.

In early May, Bitcoin opened the month at $ 40,000. However, on May 7, the UST started losing its dollar peg. On May 13, UST closed daily at $0.13 after falling as low as $0.06 that day.

During the crisis, the price of BTC fell to $30,000 by May 11. And by mid-June, the price had fallen 62% from the end of March to $18,000.

The chart below shows the total supply held by long-term holders (LTH). Glassnode defines LTHs as individuals who have held a job for more than six months. It shows a gradual fall in LTHs in early May as the news of UST depeg spread.

The bottom of this trend came out in late July and resulted in a continuous 45 degree rise in LTHs. The main reason for this pattern is the buying activity at the beginning of April and May (six months ago), which has matured since the classification of LTHs.

Bitcoin Supply by Long Term Holders, Source: Glassnode.com

Change in the net position of the LTHs

The Bitcoin: Long-Term Holder Net Position Change refers to the distribution of tokens by LTHs shown in green as net accumulators or in red as net issuers liquidating their positions.

As the macro picture worsened in the second half of the year, LTHs began selling their positions. Since September, however, the trend has reversed, with LTHs seeing value at these prices and accumulating accordingly.

Bitcoin: LTH Net Position Change, Source: Glassnode.com

Short term vs long term holders

In the chart below, the definition of LTHs is changed to a holding period of more than one year, meaning that Short-Term Holders (STHs) refers to a holding period of less than one year.

Price spikes in BTC were found to coincide with a leveling off, or significant drop, in the supply of STH. The exception to this was the period before and including the high price of $900 in December 2013. In these cases, no pattern was observed in the STH.

Likewise, since this isolated period, there has been an increase in LTH supply due to LTH signals accompanying a market lull.