The Bitcoin RHODL ratio has risen to the third highest in history, which may indicate that the Bitcoin bottom has formed

According to CoinDesk, Glassnode's Bitcoin on-chain metric RHODL ratio is currently at 4.5, the third highest level on record, signaling a market bottom rather than a cycle top.

The RHODL ratio compares the value of Bitcoin held by long-term holders (holding for 6 months to 3 years) to that held by short-term holders (holding for 1 day to 3 months). An increase in the ratio typically reflects a longer holding period for chips and a decrease in speculative activity, rather than an influx of new buyers—this dynamic has been observed after significant corrections in 2015, 2019, and 2022. During the 50% drop in Bitcoin over the past six months, young speculative chips have been largely washed out, concentrating wealth among long-term holders.

Historically, the RHODL ratio has only been higher than the current level twice: in 2015 (ratio of 5) and in 2022 (ratio of 7), both corresponding to cycle bottoms, which suggests that Bitcoin may still have further downside potential. However, to push the ratio to higher levels, short-term holder activity typically needs to be nearly exhausted, and this situation is not yet evident under current conditions—Bitcoin has rebounded about 25% from its February low, perpetual contract funding rates remain negative, and the S&P 500 has also reached an all-time high.

Overall, this indicator suggests that the current market conditions are more akin to an adjustment within the cycle rather than a cycle top, and the re-emergence of long-term holders dominating the market may indicate that a phase bottom is approaching.