The bitcoin price has fallen sharply since the peak in 2021. However, this does not mean that the number of investors has also fallen sharply. According to analytics company Glassnode, even the opposite is the case: holding your bitcoin for a long time has never been more popular than it is now.
The Bitcoin market has traded within an extremely tight price range this week, whilst on-chain volumes have been extremely light, hovering around cyclical lows.
Meanwhile, large swathes of the coin supply remain dormant in investor wallets with supply in several key age bands… pic.twitter.com/t2h5v5YnCT
— glassnode (@glassnode) May 22, 2023
More and more Bitcoin HODLers
Out on chain data shows that 68% of all bitcoin (BTC) has been held for at least one year. In fact, 53% of outstanding tokens have been doing this for two years, and almost 40% have had their coins for three years. One applies to all three periods all time high. Dthat means that the number of bitcoins that are held for a long time is growing, so HODLing is more popular than ever.
FundStrat senior blockchain analyst Sean Farrell explains CoinDesk that investing for the long term has indeed become more popular. The only exceptions to this are the periods when the market is in a bubble. The people who bought the bottom then sell their coins at a nice profit, and thus trade more actively.
“This trend is favorable as long as current HODLers do not sell. (If high prices continue) that could create a small supply squeeze,” says Farrell. He does emphasize that the signal says little about price developments in the short term. HODL stands for ‘hold on for dear life’, which nicely reflects how volatile the market can react.
Active Bitcoin traders remain long
Glassnode also uses the ‘Long Term Holder Supply metric’, which includes all coins with an ‘age’ of 155 days and older. This limit is now the period just after the problems at FTX. The characteristics shown by long-term investors are often slightly different from those of ‘Short-Term Holders’, which Glassnode labels wallets that have not moved any coins for up to 90 days. These traders are currently only willing to sell their coins. That suggests they are waiting for higher prices.