The number of inactive BTC-holding addresses is slowly but surely increasing as investors are reluctant to sell, so inflows into exchanges are relatively low compared to past sell-offs. Glassnode, a cryptanalysis platform that generates intelligent data, revealed not that long ago that substantial amounts of Bitcoin remain dormant in holder wallets because crypto participants prefer to hold, with several key age bands hitting all-time highs.
Dormancy is the average number of days each token transacted remains idle – the metric was created by Reginald Smith and David Puell. BTC holders hope to make an impact through HODLing, but if more Bitcoins remain inactive, it could lead to a spike in price.
Bitcoin HODLing Has Never Been More Popular
Some investments require long-term holding to reap the returns. Cryptocurrency is one such example. HODL is a popular term among investors; it stands for “hold on for dear life.” Once you’ve built your portfolio, you don’t need to make changes or check prices, so it’s highly unlikely you’ll make a terrible decision. Smart investors who believe in crypto should not trade frequently but rather buy bitcoin or another currency and hold long term (not investment advice).
Simply put, HODL is the opposite of trying to “beat the market,” which involves getting returns higher than the broader market achieves. The level of HODLing across the BTC supply is high, with token inactivity supporting the drastically reduced on-chain volume throughput. HODLing is a safer option for crypto participants because they’re not exposed to the short-term volatility of the market, and it eliminates the risk of buying and selling low.
According to Glassnode, Bitcoin’s liveliness index, which offers insight into shifts in macro HODLing behavior, has reached its lowest level since December 2020. Liveliness is calculated by taking into account the ratio of cumulative coin days shattered to the cumulative sum of all coin days ever accumulated by the network. BTC’s liveliness index confirms that most investors would rather HODL at the current market conditions.
Dormant Bitcoins Sometimes Find Their Way Back into Circulation
Money circulates continuously, sometimes moving to a different place, other times tracing a curve or describing a small cycle, yet when it comes to cryptocurrency, the exact opposite happens. Miguel Morel, founder and CEO of Arkham Intelligence, stated that dormant Bitcoins find their way back into circulation with time.
Even if the motivation behind the transactions remains unclear, there’s been growing speculation on why long-time cryptocurrency holders are moving their funds. At any rate, tokens are transferred from investors with high time and liquidity preferences to those with low time and liquidity preferences, meaning that for every seller, there’s a buyer.
BTC from ancient supplies is typically moved by whales, i.e., individuals or entities holding large amounts of cryptocurrency and making absurd returns. Sophisticated investors make money because they sit on Bitcoin for a long time, whales, that is, while retail investors are more likely to lose out, despite the fact they hold onto their crypto funds for more than 155 days.
Earlier this year, long dormant BTC whales resurfaced and transferred millions amid concerns of wallet-draining operations – 279 Bitcoins, or $7.8 million, were reactivated after more than a decade. It’s not often that old Bitcoins see the light of day.
Non-Zero Bitcoin Addresses At ATH
As the name clearly suggests, a non-zero Bitcoin address is a wallet that contains a positive number of tokens, even the smallest fraction of BTC (Satoshi). As Glassnode highlights, on-chain metrics have changed drastically as an ever-increasing number of non-zero addresses have reached new highs, which translates into the fact that holding and self-custody are prominent.
For the past few weeks, Bitcoin has maintained its range-bound price movement, but it fell below the $27000 level; BTC’s price today is $26,710.10, with a 24-hour trading volume of $12.36B USD. Still, many argue that a bullish trend reversal could take place this year.
As opposed to traditional accounts with financial institutions that require a minimum amount of financial deposits, Bitcoin wallets provide autonomy, so the holder gets to decide how much cryptocurrency to buy, so it doesn’t come as a surprise that more people are interested in BTC.
Ordinals have contributed to network activity, bringing about new users. For the sake of clarification, Bitcoin Ordinals are means of creating NFTs that can be minted directly onto the blockchain. Back on topic, the number of addresses with a non-zero balance has exceeded 44 million, but the number of overall BTC addresses is decreasing, unfortunately.
How To Know When to Sell Your Bitcoin
More than one out of every two Bitcoin in circulation hasn’t moved in the past two years, and increasing dormant supply is characteristic of bear markets. Therefore, macro-accumulation over a multi-year scale remains in effect, with HODLers and long-term holders unimpressed with the current economic conditions.
If you’re not sure whether to sit or cash on your investment, you should better be patient, or you risk your financial success. Maybe there are signs the BTC price is unlikely to recover; there’s a consistent drop in value over time, combined with other factors like a lack of enthusiasm in the community. In that case, you should consider selling your crypto holdings.
On the other hand, if the value of Bitcoin has risen substantially, doubling or even tripling, it might be a good time to sell. It’s recommended to sell only a portion of your investment so that you won’t have lost your initial capital investment in case the price drops.
Knowing when to sell and when to hold can be a challenging decision as there’s no one-size-fits-all solution – the decision is up to you and should be based on several aspects, including your risk tolerance, time horizon, and financial goals. If you’re unsure about how to devise a strategy, educate yourself or reach out to a financial professional.
All In All
Bitcoin accumulation and holding show no signs of stopping, and this reluctance to sell means that more of the supply is becoming dormant. Earlier extended periods of consolidation have resulted in a big move, but only time will tell what will happen next.