Crypto Investors are Not Profiting

On-chain data shows that crypto investors are not taking profit, however, they are still holding on even in the face of economic uncertainty and the strong performance of bitcoin.

It may come quite shocking but by the data on the 15th of June, 60.63% of all of the bitcoin has not moved an inch for over a year even though it peaked a couple of months ago and reached its highest in the last 2 years. This information comes from Glassnode, which is a blockchain data and intelligence provider which develops applications that provide new ways to gain insight into blockchains and cryptocurrencies. The data suggests that the bitcoin (BT) owners are consolidating and investors who have acquired the crypto in 2018 are not willing to sell their investments. This is the largest supply sitting inactive for almost 4 years now.

Lots of cryptocurrencies and bitcoin, in particular, are affected by loads of different aspects. For instance, the socio-economic problems in the United States of America have shifted the pricing for the bitcoin a couple of times during the last months. The protests caused by the death of George Floyd fueled the long-brewing emotional response from the people and black minorities in particular to systemic racism. With the President of the United States, Donald Trump, being actively involved in the dissolution of the situation as he commanded the national guard to move in and assist the police with some of the more aggressive parts of the protests have shifted the price of bitcoin to $10,500, which is the peak price since its last jump couple of years back.

The way active bitcoin traders have been dealing with trading bitcoin has been the use of stop loss and take profit orders, which gives them the ability to close the trade as soon as the price hits bare minimum for them to make a profit. This means that the traders are staying on the safer side while still maintaining their financial stability and avoiding big losses. The matter of fact is that the market may start shifting at any time. This may happen when the trader is sleeping or out on their business. One cannot sit next to the computer 24 hours 7 days a week watching the charts. Thus the tools at hand have come in extremely handy.

The ongoing issues with the novel coronavirus pandemic, which rocked the world and resulted in the massive lockdown of borders unseen before have also disrupted all of the markets making trading that much more dangerous. However, for a vigilant trader, it still leaves the opportunity to make huge gains. This is exactly what has caused the shocking bearish tendencies on the market with bitcoin that Glassnode has uncovered.

One of the methods used to analyze inactive bitcoins is to group them using the length of time they’ve been inactive. This method was pioneered by the Austin, Texas-based Unchained Capital. The method has been named “HODL Waves.” It is a visualization that shows the cross-section of the wallets where bitcoins are held and groups them by the amount of time since they have been moved.

The term “HODL” stands for “Hodled” and represents the behavior of people who are just sitting on bitcoin with no intention of using them. The co-founder and the CSO of the Unchained Capital, Dhruv Bansal, has stated that the HODL wave represents the people “who bought bitcoin on the way down from $6,000 to $3,000 in 2018 are still holding it despite the tremendous gains since then and the recent economic turbulence.”

The two segments that have grown during the last couple of years are the bitcoins held for more than 10 and the ones that have been locked up for 2-3 years. The increase has happened by 31% and 26% respectively. The 2-3 year one represents the coins held from the 2017 market all-time high to present.

There are numerous reasons why the “hodling” can happen though. It may not even be due to the fact that someone just wants to sit on a bitcoin but rather maybe they have bought it up way back in the day and have forgotten all about it, or maybe they cannot log back into their Coinbase or have lost Trezor (wallet). It is also, sadly, true that some of these people may just be deceased without their family or friends ever knowing about them owning the bitcoins in the first place. Back in 2010, no one knew bitcoin would be hitting such highs. There was even a time when Laszlo Hanyecz bought 2 pizzas with 10,000 bitcoins back in May, 2010. The media was all lit up with the first official sale made with cryptocurrencies. This was the time when bitcoin was a little over 1 year old. Most of the people back in the day just bought it for the laughs. Some have kept on them and accumulated immense amounts of riches, while others, unfortunately, have lost their lifetime opportunity to strike the jackpot. However, when it comes to Laszlo, he states that there are no regrets from his side.

The first quarter of 2020 has been extremely volatile. Ongoing macroeconomic uncertainty and the increase in the amount of bitcoin just being stashed away in traders’ wallets just gives the incentive that a lot of people still believe in their purchase. One thing is for certain though, the bullish pattern is quite apparent in traders all over the world right now. And as Bansal has also stated: “If you believe bitcoin’s price history repeats or at least rhymes, then this may be a bullish sign, the market consolidating into strong hands as macro trends highlight bitcoin’s value proposition.”

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