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Bitcoin Hodling at All Time High
Hodling is a term unique to cryptocurrency. It simply means that investors do not sell their bitcoin. HODL stands for “hold on for dear life”, a term that echoes the extreme volatility of the cryptocurrency markets. It turns out that hodling can actually be measured in one way or another. Cryptowatch, a cryptocurrency analytics branch of Kraken spends their time analyzing market metrics in order to determine trends. One trend in particular informs them on how many hodlers there are at any given time. Cryptowatch reports that bitcoin hodling is at an all time high.
Hodling Rises before the Price
The last time the hodl metric hit an all time high, it was right before bitcoin tripled in price. That’s because hodling decreases the tradable supply on markets. If people are not trading with their bitcoin, then there are less bitcoin to be traded with. As demand rises, and tradeable supply goes down, this is a perfect recipe for an aggressive increase in price. Naturally, some of the hodlers will then sell their bitcoin, causing the price to drop. This is roughly the price cycle that bitcoin has gone through several times before.
Number of Bitcoin Whales has Risen
Analysts are claiming that we are on the cusp of a major bitcoin bull market. The two metrics that they are clinging to in order to justify this claim is the number of hodlers, and the number of whales. Glassnode, a cryptocurrency market statistics aggregator defines a whale as being any bitcoin address with more than $1M USD inside of it. This number has risen sharply in 2020, likely due to the massive dip in the price of bitcoin in March. The March 2020 presented a massive buying opportunity for those who are bullish on bitcoin long term. If you were to invest in bitcoin during the March 2020 crash, you would have almost tripled your investment.
Hodling is Indicator of Long Term Adoption
Hodling is famously for the people in bitcoin that don’t know how to day-trade. Hodling was originally a typo by a forum member who meant to say “holding”. The individual casually stated that they are not a trader, and not willing to lose a bunch of money trying to be one. This is in line with the majority of people in the cryptocurrency space. In order to be a day-trader, you need to have the time, energy, and strategy to do so. For most people with a day job, this is out of reach for them. Instead, the most popular strategy for investing in cryptocurrency, is to hodl it.
To hodl, is to believe that far into the future (1, 2, 5, 10 years), the bitcoin will be worth far more than it is worth today. By hodling, you are implicitly acknowledging that you think there is long term value for bitcoin. Considering that bitcoin hodling is at an all time high, it appears that a lot of people think bitcoin will continue to be adopted in the future.
