The 4.5 signal: Why Glassnode’s RHODL ratio says the bitcoin bottom may be in
RHODL ratio suggests market conditions resemble cycle corrections rather than late-stage tops, as long-term holders regain dominance.
What to know:
- The RHODL ratio has climbed to its third highest level on record, reflecting a market where long-term holders dominate following a 50% correction that flushed out short-term speculation.
- While higher readings were seen in 2015 and 2022, further upside in the ratio would likely require a deeper collapse in demand, a scenario that appears less likely given bitcoin’s recovery and strong macro backdrop.
The ratio compares the value of coins held by longer-term investors, typically those holding for six months to three years, against coins held by short-term participants, defined as one day to three months. By measuring this balance, it offers insight into whether the market is dominated by seasoned holders or fresh demand from new entrants.
A rising ratio often reflects coins aging and a decline in speculative activity, rather than an influx of new buyers. This dynamic typically emerges after sharp corrections which can be seen in 2015, 2019 and 2022.
There are two occasions where the RHODL ratio has been higher than now, is 2015 (ratio of 5) and 2022 (ratio of 7), both cycle lows, which could suggest there is further downside for bitcoin.
However, pushing to even higher levels typically requires an even deeper collapse in short-term holder activity and near-complete demand exhaustion, conditions that are less evident today given the 25% price recovery from the February lows, negative perpetual funding rates and broader macro risk environment which has seen S&P 500 hit new all-time highs.
