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Bitcoin On-Chain Fundamentals Appear Stronger Than Ever—HODL

Bitcoin is encircled by many impressions since its foundation until now, which has been more than a decade. Bitcoin price dynamics is an interesting and important point from the view of investors who have already invested or are probable BTC investors. Moreover, since the Pandemic started, Bitcoin and cryptocurrencies have gained enough impetus to answer simple questions like—

“How can you earn from home?”

“Which investment is profitable and can earn a handsome profit?”

The Coronavirus lockdown gave an opportunity to people to compare the significant differences and benefits between Bitcoin or cryptocurrencies and other traditional assets like stocks, bonds, ETFs, etc. It was then when Bitcoin was renowned and gained enough impetus as a new and upgraded way of investment. Well, together, people even realized that Bitcoin is not just an investment but is beyond it. The fundamentals and technicals of Bitcoin have revamped the standard of financial investment avenues as people believe Bitcoin to be the asset for the long-term.

Since long-term is the goal of investment, every dip is a HODLing opportunity for Bitcoin loyalists and lovers. Also, the on-chain analysis of the coin has been serving the purpose of investors to emphasize the technical specification like the maximum HODLing period, number of new addresses, number of days to the last transaction, etc. These variables are summarizing the investor behavior towards Bitcoin investment, which was the only cryptocurrency that people knew in the past.

Confidence in Bitcoin has led to an increasing number of BTC HODLers, which has, in turn, led to many newbies in crypto space. Moreover, blockchain and crypto are evolving and growing like the branches of a tree and now hold a widespread presence in almost all the developed and developing sectors. With this, the crypto space is elevating, and the investments now will result in extremely bullish crossovers and returns in the future.

Per the data drawn from the On-chain analysis done by CTO of Glassnode Rafael, it triggers all the important points from the Bitcoin investor’s point of view and the confidence thereby. The agenda here is to examine the investors investing pattern and HODLing behavior towards this powerful security. Therefore, the first point to be highlighted here is the number of BTC that have remained stagnant after the supplied and for how many years.

The above tweet shows that Bitcoin held over a period of one year has reached an All-time-High at 61%, which is commendable. This period of one year has seen many complex price movements with a yearly high of around $13k and low at $3.4k. This shows the restored trust of investors in Bitcoin despite market volatility and, on the contrary, the strong support that it held when the worldwide markets crashed.

Next, around 44% of BTC supplied have not moved in a period of 2+ years, which is almost approaching ATH, followed by 30% marking a HODLing period of 3+ years. This data has been enticing enough for the potential investors to splurge in Bitcoin by looking at the opportunity that the HODLers foresee.

The next important variable pointed is the average of Coin Days Destroyed. Now, Coin Days Destroyed= transaction of Bitcoin volume*number of days the last activity happened (combined from individual addresses per year). Here, the lower, the better, and this level is decreasing and has marked the lowest since 2016 except the highest in 2017 when the coin touched an ATH at $20k. The year 2017 was an explicit opportunity to trade in Bitcoin, and the investors were looking forward to an even higher mark beyond $20k. Well, there are many addresses who with the intention of further growth splurged at $20k price level then, which resulted in higher Coin Days Destroyed.

The next in order is Bitcoin Binary Coin Days Destroyed, which is equal to the number of days per year in which more coins were destroyed compared to the historical average. The year 2020 has marked the lowest since 2010; thereby, the lowest the best.

The next in line is the reserve risk associated with the investment in Bitcoin. The reserve risk being the lowest in the ongoing year points at the prospective measure of risk around Bitcoin investment in the current year and over the next 12 months. The lowest Reserve Risk point towards an amazing risk/reward ratio to invest at present.

The 6th in the order is strange but Liveliness ration, which calculates coin days destroyed and the sum of all the coin days ever created. One part of the ratio points at Coin Days Destroyed against total coin days ever created points at a simple of there is a high number of coin days destroyed, the long-term holders are shorting or liquidating their investment in Bitcoin. Thereby, a decline in this ratio points at a vice versa situation and brings us to the same conclusion that the long-term investors are now amassing to HODL.

The next in the serial is the number of lost and HODLed Bitcoins for individual addresses. This has categorically increased by 8% since the beginning of 2019, which is now more than 7.3 million BTC, which makes 40% of the total circulating supply.

HODLers have been actively HODLing their position and accumulating. There have been only 16 days if we emphasized the YTD chart when Bitcoin HODLer Net Position Change in BTC had turned negative.

The next measure is the Median Spent Output Lifespan, which is was the highest in 2018 in a duration of 10 years. Over the past two years, this has been decreasing, which exhibits that on the average age of Bitcoin moved on-chain is declining for the past two years, and the lowest is lowest from the past three years.

This fundamental in the on-chain analysis measures Bitcoin transaction volume, which is seen at par with the amount (in USD) in 2016, which presently is less than and more than 2017 and 2018, respectively. With the importance given to HODLing as an important factor in investing in Bitcoin, the above fundamentals confirm the stagnant transaction volume, which leads to less spending.

With the importance of HODLing realized throughout the fundamentals of the given On-chain analysis, Bitcoin appears extremely bullish irrespective of the current price momentum, which is stagnated below $9.5k and has also retested support around $8.9k twice in a period of two weeks now. However, the YTD chart emphasizes the visible uptrend that is being formed after the market crash in March.

Mehak Punjabi

Mehak Punjabi is a post-graduate in MBA with a specialization in Finance and has joined CryptonewsZ with a skill-building view in the world of cryptocurrency and blockchain. She is dynamic and a quick learner with a hold on financial analysis.

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