- Bitcoin investors demonstrate extreme HODL’ing.
- Over 70% of the circulating Bitcoin supply remains inactive for over a year.
- Extreme HODL’ing increased as the Bitcoin price began moving higher.
HODL’ing conveys that a particular coin or token has a sustainable future. Bitcoin investors have taken this commitment to the extreme as data shows that more than 70% of the circulating BTC supply hasn’t moved in more than a year, demonstrating rock-solid conviction in the protocol.
Bitcoin Supply Is Mostly Inactive
The Bitcoin supply, inactive for over a year, began trending higher in late 2021, per Glassnode data . After declining to a low of around 52% in December 2021, the percentage of dormant BTC began increasing rapidly until May 2022. A relative lull followed as the investors digested the impact of the Terra LUNA implosion .
Even so, inactive Bitcoin for over one year continued to climb, albeit slower than pre-May 2022. This trend reversed over the summer, but a sharp uptick by November took the on-chain metric to 70.3% just as Bitcoin was winding up to hit a new yearly high in early December.
Inactive Bitcoin supply per Glassnode.
Glassnode’s “BTC: Supply Last Active 1yr+ Age Bands” metric tracks the longevity of Bitcoin in investor wallets. This metric rises as coins get accumulated by long-term holders. Conservely, as holders spend or move their BTC, the metric declines accordingly. Currently, we’re seeing the former occur, with the lion’s share of supply being HODL’ed by investors with a multi-year time frame.
This pronounced pattern of HODL’ing signals enduring confidence in Bitcoin’s long-term investment thesis despite enduring bear market challenges, which seem to be subsiding as 2023 draws to a close.
Bull Market Here?
Bitcoin’s recent strong run of form has been largely attributed to expectations of a regulatory nod to the flood of spot BTC ETF applications, which has driven the narrative on a subsiding bear market.
The leading cryptocurrency began increasing in mid-October, rising from $26,900 to a yearly high of $45,000 by December 5. However, momentum stalled after a violent sell-off triggered a sharp fall to $40,000 on December 11. Bitcoin has since been caught in a tight range, trading between $40,500 and $42,000.
BTCUSD daily chart per Trading View.
On the Flipside
- Despite stalling price action, 2024 is still predicted to be a bullish catalyst for Bitcoin as the halving nears.
- Critics argue that lower liquidity from inactive coins inhibits Bitcoin‘s use as a medium of exchange.
- US Senator Elizabeth Warren recently proposed a bill to crack down on crypto‘s use in illicit activity, including extending KYC requirements to private crypto wallets.
Why This Matters
Bitcoin investors have demonstrated stoic conviction by resolutely HODLing through bear market lows. These supply dynamics affirm Bitcoin’s endurance as true believers refused to flinch even amid the most testing times.
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