Bitcoin ‘hodlers’ unfazed by recent market volatility

Fresh data suggests 40% of bitcoin’s total supply has remained stationary for more than three years

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Velishchuk Yevhen/Shutterstock, modified by Blockworks

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Long-term holders appear to be maintaining a strong grip on their investments despite recent market volatility, according to multiple on-chain metrics for the world’s largest digital asset.

Notably, the 1+ Year HODL Wave, a measure of bitcoin holdings untouched for at least a year, reached a peak of 69.2% on July 7 and remains elevated at 68.6%, LookIntoBitcoin data shows. 

While bitcoin (BTC) experienced a sharp 10% drop within a two-hour window on August 17, long-term holders have largely abstained from liquidating or moving their assets. 

Sparked by a sharp drop in US bond yields on Tuesday alongside a small victory in Grayscale’s fight against the SEC to review its application to convert its flagship trust into a spot bitcoin ETF, bitcoin jumped 6.2% to $28,160, its largest daily move in 5 and a half months. 

“If Grayscale’s application to convert its Bitcoin Trust into an ETF is indeed approved in the future, we can expect BTC to climb significantly from here,” Yield App CEO Tim Frost told Blockworks.

The asset has since withdrawn 1.8% and is currently trading for around $27,250, exchange data shows.

This comes while fresh data suggesting that 40% of bitcoin’s total supply has remained stationary for more than three years, Bitfinex Alpha wrote in a recent research note.

1+ Year HODL Wave; Source: lookintobitcoin.com
1+ Year HODL Wave; Source: lookintobitcoin.com

Changes in market dynamics point to an underlying sentiment of resilience and optimism among long-term holders, who appear unfazed by recent market upheavals and reversals.

On-chain metric Coin Days Destroyed (CDD), which gauges the activity level of long-standing coins, has fallen to March 6 lows when viewed over a 30-day average.

A low CDD often correlates with reduced selling pressure in the market, according to the metric.

Coin Days Destroyed; Source: lookintobitcoin.com
Coin Days Destroyed; Source: lookintobitcoin.com

“It’s evident that long-term bitcoin holders have been on a net accumulation spree,” Bitfinex wrote. “The behavior insinuates a broader sentiment of optimism and potential resilience against market volatilities.”

Historically, elevated levels in the HODL Wave metric have often coincided with significant price moves, although the direction — bullish or bearish — remains variable. 

The consistency between these different data points could suggest that a considerable segment of the market is in a holding pattern, potentially anticipating future market developments or simply opting for risk aversion amid market turbulence. 

Additionally, the 1+ Year HODL Wave has shown a robust positive correlation of about 0.730 with bitcoin’s price. 

Bitcoin’s market price has often increased when the metric has been high. Conversely, a contraction in this metric has oftentimes preceded a decline in bitcoin’s value. 

Therefore, the current elevated levels could serve as a forward-looking barometer for market sentiment, Bitfinex wrote.


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