HODL Returns to Bitcoin Investing

Experienced cryptocurrency market participants are familiar with the acronym “HODL,” or “holding on for dear life.”

In bygone eras of bitcoin investing, HODLing often referred to smaller investors perhaps getting bad entry prices and subsequently holding onto bitcoin positions through significant declines and elevated volatility. Fortunately, the perception of HODLing and its devotees could be a longer-ranging positive for bitcoin and the broader cryptocurrency complex.

Recent data from research firm Glassnode indicated that the percentage of bitcoin investors that are holding stakes in the largest digital currency for extend periods of time is increasing. For example, the percentage holding bitcoin for at least a year is up to a record 68%. The two- and three-year holdings figures are impressive as well at 55% and 40%, respectively.

Market observers can debate interpretations of those percentages, but a case can be made that multiple takeaways are positive. For example, by extending holding periods, investors are signaling that they view bitcoin as a long-term asset with significant price appreciation potential.

Or they could be indicating that they’re growing accustomed to the asset’s volatility and that they won’t abandon positions amid short-term declines. On a related note, market participants’ increasing penchant for holding bitcoin for longer time frames could also be a sign that some are using dips to add to existing positions.

“Many analysts consider it bullish when BTC sits dormant on grounds that investors are choosing to hold on rather than sell. The prevalence of buy-and-hold in crypto contrasts with the long-term shift in U.S. stocks, a market where investors now hold assets for dramatically less time than they used to,” reported Lyllah Ledesma for CoinDesk.

Whales and Minnows

While the daily gyrations of bitcoin largely depend on institutional investors and other so-called whales — generally those with at least 1,000 bitcoin — smaller investors can impact the digital currency’s price and volatility metrics if they sell en masse. Said another way, the less jittery and more dedicated smaller bitcoin investors are, the better the odds that volatility in the market can ebb lower, albeit modestly.

Citing Glassnode, CoinDesk highlighted some other important, positive points.

“Long-Term-Holder Supply, which Glassnode deems as coins held for longer than 155 days, has also seen a new all-time high — reaching 14.46 million bitcoin,” according to the article. “Glassnode’s Liveliness metric – which compares the relative balance between HODLing and spending behavior – also shows investors are hanging on. It has fallen to the lowest level since December 2020.”

For more news, information, and analysis, visit the Crypto Channel.