Seasoned Bitcoin (BTC) hodlers have hardly spent any coins despite $69,000 all-time highs this year, data shows.
According to the Coin Days Destroyed (CDD) metric from on-chain analytics firm Glassnode, the proportion of coins being spent by old hands remains near record lows.
Strong hands knuckle down throughout 2021
In the latest sign of the conviction of those who invest in and hold Bitcoin over multiple years, CDD remains extremely calm.
The indicator refers to how long each BTC has been dormant each time it moves. This provides an alternative to simple volume measurements to determine market trends. Older coins are thus more “important” than younger ones with a history of active movement.
“Despite a rise over the last few months, the current value is still around historic lows,” Twitter account UTXO Management summarized alongside an imprint of the chart.
The data highlights that since a spike in old hand selling after BTC/USD crossed 2017’s all-time highs of $20,000 last year, strong hands have stayed firm.
Even the run to nearly $70,000 failed to break the trend significantly, and selling still appears to be coming from newer market entrants.
Summer buyers are winter sellers
Another metric, Unchained Capital’s HODL Waves, confirms this — those coins purchased between three and six months ago now account for the biggest decrease in the overall supply.
Related: Countdown to the yearly close: 5 things to watch in Bitcoin this week
This implies that sellers acquired their BTC between June and September this year, the period during which BTC/USD dipped to lows of $30,000.
As Cointelegraph reported, clear distinctions between different groups of hodlers have long been under the microscope.
Even those who entered the market at $20,000 are doubling down, as BTC/USD looks set to end 2021 around $20,000 higher than at the start of January.
#Bitcoin is once again in accumulation mode. pic.twitter.com/BezC2AUewO
— Dylan LeClair (@DylanLeClair_) December 23, 2021
Meanwhile, UTXO Management senior analyst Dylan LeClair last week noted that overall, hodlers are adding to their positions this month.
Bitcoin (BTC) investors who bought at 2017 all-time highs and above have still not sold, data suggests.
According to the HODL Waves metric, coins which last moved in the past six to twelve months now make up the biggest portion of the BTC supply.
BTC buyers hold their nerve
Despite strong gains and equally strong corrections in 2021, those who entered the market or added to their positions in or after November 2020 are refusing to sell.
HODL Waves, which track the age distribution of unspent transaction outputs (UTXOs), show that the supply controlled by those six to twelve-month “hodlers” has increased — from 8.7% at the start of June to 21.4% as of Nov. 17.
At the same time, coins held for multiple years have decreased only slightly, highlighting that modest selling has taken place and that, with the exception of the six to twelve-month group, investors’ resolve remains steadfast.
The data underscores the theory that few BTC owners intend to sell at current prices, even as these circle all-time highs.
As Cointelegraph reported, however, distribution of coins by long-term holders — a classic characteristic of bull market peak phases — has now begun. The last time this occurred was also in November last year.
Bull market “still has a ways to go”
Meanwhile, further numbers tracking “older” BTC also hints that Bitcoin’s oldest hands will continue to sit tight.
Bitcoin (BTC) investors continue to hodl BTC at $40,000, even if they bought it at lower levels earlier in 2021.
In the latest edition of its newsletter, The Week On-Chain, on June 14, on-chain monitoring resource Glassnode revealed that buyers from the first months of this year’s bull market are refusing to cash out.
“Very young” supply in decline
Bitcoin has been marked by low volume in recent weeks as price action remained rangebound between $30,000 and $41,000.
The past few days has seen modest volatility return, but for most hodlers, there are few opportunities for profiteering under current circumstances.
Glassnode suggests that this is clear by looking at so-called HODL Waves, an indicator which shows what proportion of the Bitcoin supply last moved. These are based on Bitcoin’s realized cap, a measure of market cap which takes into account the price at which each coin last traded.
HODL waves confirm that, in part thanks to low volatility, the Bitcoin supply is ageing, and few investors are selling.
“Not only are we seeing a decline in very young coins (<1-month old) due to the recent low on-chain volume, we are also seeing an expanding share of coins aged between 3-months and 12-months old,” researchers explained.
“These are those same HODLed coins that were accumulated throughout the 2020 to Jan 2021 bull market.”
As such, even coins now in profit by a significant percentage, if not double their buy-in price, remain dormant.
“Some LTHs (long-term holders) have and will take profits on their coins,” Glassnode acknowledged.
“What is common in all Bitcoin cycles is that LTHs spend a larger majority of their coins into the strength of bull rallies, and slow their spending on pull-backs as conviction returns.”
The “little guy” makes a comeback
Long or short-term, investors with smaller overall holdings are growing.
As Glassnode subsequently noted this week, wallets with less than 1 BTC continue to make up more and more of the overall Bitcoin supply.
Related: Bitcoin price bottom is in, says Fidelity exec as crypto market exits ‘extreme fear’
“The response of ‘the little guy’ to the evolution of Bitcoin as an asset can be seen in the supply distribution,” the company posted on Twitter Wednesday.
While institutional and now even state adoption of Bitcoin comprise most of the headlines when it comes to expanding influence, it is individual small-scale investors who are making noticeable inroads into the market this year.
Bitcoin buyers from the early phases of the bull run are still hodling despite BTC’s meteoric surge into new all-time highs, according to data shared by Glassnode.
The on-chain analytics provider shared its “Realized Cap HODL Waves” chart, noting that the number of coins that were last realized on-chain in the past six months has nearly doubled from roughly 40% to 80% since the third quarter of 2020 — showing that much of the BTC purchased during this period has not been touched since.
HODL Waves are used to estimate the time since BTC coins last moved on-chain, while the realized price is derived from the price the coins were last moved at, rather than the current price. As such, the colored bands shown in the Realized Cap HODL Waves chart increase in thickness “as coins mature or are spent into different age bands.”
The data evidences that a large number of BTC purchased during 2020’s later months have not since been traded, with the chart showing coins progressively maturing from the fourth-quarter 2020 onwards.
#Bitcoin supply accumulated in the early phase of this bull market is beginning to mature.
HODLed $BTC are seen in Realized HODL Waves as the thickness of older age bands swell over time
Read More in The Week On-chainhttps://t.co/0aSkAgiUoE
Live Chart: https://t.co/ZmfWKNLn8o pic.twitter.com/Q6BeTJ4FbQ
— glassnode (@glassnode) May 4, 2021
Analyzing the chart in its May 3 Weekly On-chain report, Glassnode stated: “These are coins accumulated in the early bull market that have remained dormant since.”
However, the chart also shows that the share of Bitcoin’s supply represented by coins last active between six months and three years ago has plummeted since mid-2020, dropping from more than 55% in July 2020 to around 10% now. This means long-term investors have been capitalizing on Bitcoin’s all-time highs and realizing profits on multi-year positions.
Short-term speculation also appears to have surged since November, peaking with roughly half of Bitcoin’s supply having been realized in the past three months. This suggests short term traders are driving the markets.
For the very first time in a Bitcoin (BTC) bull market, not only long-term investors but also short-term speculators who usually add to the daily sell pressure toward the end of a market cycle have become increasingly confident of higher prices as they hold on to their Bitcoin.
This only adds to the already existing supply shock. If demand remains strong, this is a recipe for another leg up for the BTC price.
Bitcoin selling activity is declining again
Every Bitcoin bull market usually coincided with an increasing number of short-term speculators coming into the market hoping to turn a quick profit, while long-term speculators start to add sell pressure toward the second half of the market cycle to realize their profits.
One of the best on-chain indicators to see this trend unfold in each cycle is called HODL waves. Hereby, the length at which each BTC address holds Bitcoin before they are sold into the market is clustered into term buckets that are then visualized in different color bands.
For example, someone who held on to their Bitcoin for five months would fall into the 3m-6m bucket, the light orange color band. If that person decides to sell, it falls out of that bucket and would show up in the 24h-term bucket, the dark red color band.
This means, the redder the colors are in the HODL waves chart on a respective date, the more short-term turnover of Bitcoins happens. This activity is almost at its lowest during a bear market, and at its highest during a bull market, while the short-term activity tends to peak around a bull market top.
Reflecting realized value in HODL waves is critical
Since the Bitcoin price fluctuates significantly during the market cycles, and HODL waves only account for the absolute number of Bitcoins moved, this chart does not account for the total value realized on a respective day by a Bitcoin seller.
As it becomes increasingly lucrative for hodlers to take profit the higher the price rises, the HODL waves can be weighted by the realized price, which is the price at which each Bitcoin on average was last bought /sold.
This adjustment allows for visualizing the value-driven profit-taking on a daily basis through the value-adjusted colored, term buckets.
Bitcoin cycle tops tend to form around the short-term activity peak
Once HODL waves are weighted by the realized price, the Realized Cap HODL Waves are derived, a concept that was first introduced by on-chain analyst Typerbole. This adjustment reveals that the 1w-1m bucket tops coincide with every single bull market top so far.
This indicator does not only suggest that the current selling activity is not at a typical bull market peak yet, it even reveals that for the first time in Bitcoin’s bull market history this trend is declining while the price continues to rise.
This is a very unusual trend in a bull market. Assuming that the price peak has not been reached yet, this suggests that profit-seekers, whether they are short- or long-term focused, are starting to hold on to their Bitcoin again, expecting higher prices to come and by that adding to the Bitcoin supply squeeze on exchanges.
Bitcoin selling activity relative to the holding period is quite low
Rafael Schultze-Kraft, Glassnode CTO, takes a similar view by looking at long-term hodlers through Coin Days Destroyed, an indicator that shows the total holding days “destroyed” by holders selling their Bitcoin.
Based on a 3-months moving average of this indicator, the destruction has retraced to a level last seen in the summer of 2019 at times where the price peak was already reached.
Ok, this is beautiful.
Experimenting with Coin Days Destroyed: Despite $BTC prices above $50k, 3-month CDD at low levels and recently declining.
Old hands extremely strong here, HODLers showing conviction and doing what they do best.
Doesn’t look like a top to me.#Bitcoin pic.twitter.com/z8OL8Gt73E
— Rafael Schultze-Kraft (@n3ocortex) April 9, 2021
If the price was close to a bull market peak, a much higher indicator value would be expected as long-term holders would be taking profit in material size, which is currently not the case.
Bitcoin spending behavior relative to the market cap is low
When taking this concept of Coin Days Destroyed further and looking at it with respect to average value destroyed in perspective to the market capitalization, one arrives at the so-called dormancy flow. This is a concept invented by analyst and trader David Puell.
The dormancy flow describes the yearly moving average of Bitcoin holders’ spending behavior. It is based on the held value that gets destroyed in perspective to the overall accrued value in the market.
This indicator suggests, the 365-day average spending behavior of Bitcoin measured in USD is very healthy and far below prior bull market spending.
This is Bitcoin rocket fuel
Bitcoin selling activity whether it is from speculators or long-term holders is declining while also the annual spending behavior relative to the market capitalization is surprisingly low. All these on-chain data points suggest that the market is inching to an even deeper supply squeeze. This is one of the best rocket fuels to send the Bitcoin price higher.
However, this is not a guarantee as it requires continuous demand for the price to appreciate in this environment. Therefore, a close eye on high-net-worth individuals and institutions’ demand should be kept, as they have recently been the main driver on the buyer side.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Nothing here should be considered investment or trading advice. Every investment and trading move involves risk. The author owns Bitcoin. You should conduct your own research when making a decision and/or consult with a financial advisor.
Research from on-chain analytics provider Glassnode has found that roughly three-quarters of circulating Bitcoin last moved on the blockchain when prices were below $10,800, suggesting most market participants are long-term holders.
Glassnode’s March 29 ‘Week on Chain’ report found that 25.43% of circulating BTC last traded between the prices of $10,800 and $58,800. With Bitcoin trading for $10,800 just six months ago, the data suggests one-in-four circulating BTC last changed hands during either Q2 2020 or Q1 2021.
The report notes the number of long-term Bitcoin bulls continues to increase, with many coins that have remained dormant since early in the current market cycle now being classified by Glassnode as long-term holdings, or LTH — coins that have not moved on-chain for at least 155 days.
As a result, the number of coins being classified as entering into “illiquid supply” has surged in 2021. The Illiquid Supply Change metric has shown that the 30-day change in supply is moving from a liquid or readily traded state into an illiquid state representing HODLed coins.
The report observed that accumulation rates exceeding 130k BTC per month has been consistently maintained throughout this bull market.
Glassnode’s Coin Days Destroyed metric, or CDD, also points to increasing hodling among long-term investors, with CDD suggesting seasoned investors are again realizing gains at a rate comparable to 2020 after a surge of profit-taking between November through January.
“The take home message here is that investors and traders have continued to buy into BTC, throughout this bull market,” said Glassnode.
Bitcoin’s “Hodlwave” metric, which visually breaks down Bitcoin’s supply based on when coins last moved on-chain, shows a spike in both long-term hodling and short-term circulation amid the current market conditions.
According to Unchained Capital’s Hodlwaves, two-thirds of Bitccoin’s supply has changed hands in the six months, roughly half of which last moved during January or February. Approximately 5% of BTC’s supply was active during the past seven days.
At the time of writing, Bitcoin was trading up 4% over the past 24 hours at $57,500 according to CoinGecko.
Analytics provider Glassnode is reporting that current on-chain indicators suggest the Bitcoin bull market may be entering into its later stages.
In its March 22 Week on Chain report, on-chain analytics provider Glassnode noted a decline in the number of Bitcoin whales despite consistent accumulation from wallets holding 1 BTC or less since March 2018.
“The persistent accumulation of small holders demonstrates a willingness to HODL through volatility with the trend unbroken from mid-2018 through the chaos of 2020,” the report noted.
Whale addresses holding over 100 BTC have been relatively flat by comparison, with the group currently holding 62.6% of the supply — an increase of just 0.87% over the past 12 months.
Drawing on its “Reserve Risk” metric — which is used to assess the confidence of long-term holders relative to the price of Bitcoin, Glassnode asserts a BTC “wealth transfer” from long-term holders to new buyers is currently ongoing.
The report stated that bull markets generally follow a similar wealth transfer path over three distinct phases, which can be used to estimate what stage the current cycle is in. Peak hodl phases are inflection points where the largest proportion of long-term holder, or LTH, owned coins are in profit.
“Similar to the Reserve Risk metric, these studies suggest conditions are similar to the second half or later stages of a bull market. There remains a larger relative portion of supply still held by LTHs having only spent 9% since the assumed Peak HODL point.”
Glassnode is not alone in speculating the end of the bull season may be looming, with Chinese mining pool BTC.TOP CEO Jiang Zhuoer speculating the bull market could be over as soon as September.
Speaking to local media on March 21, he cited a general economic recovery amid COVID-19 vaccine rollouts and a likely waning interest in crypto assets should the recent trend of large corporations such as Tesla and MicroStrategy adding Bitcoin to their treasury reserves cease to continue as likely catalysts for a market reversal.
Investment manager Timothy Peterson also noted the recent decline in whales, stating: “such moves are often but not always associated with bear markets.” Peterson speculated that Bitcoin’s price could drop as low as $25,000.