In financial market terms, bitcoin isn’t an old asset class, but in its still young lifespan, the largest cryptocurrency has developed a reputation for large moves — both to the upside and downside.
As such, bitcoin has often been fertile ground for short-term speculators. In a hypothetical, though not uncommon, example, bitcoin could rally 7%, 8%, or 10% or more in a single day. For some market participants, intraday percentages such as those are enough and they’ll move in and out of a bitcoin position in a matter of hours.
However, recent data indicate crypto investors are renewing their long-term view of bitcoin, opting to hold their coins for extended timeframes rather than rapidly moving in and out of trades. Recent analysis from blockchain data provider Glassnode indicates nearly 15 million bitcoin hasn’t moved in six months. That’s just off the high of 15.02 million seen last December.
That’s a sign some bitcoin holders are content stand pat in anticipation of more gains. Those data points are all the more encouraging when accounting for the fact that digital currencies are performing admirably in the early stages of 2023.
“The Bank for International Settlements yesterday (Feb. 23) released a report concluding that the investors making profit from buying the cryptocurrency are pro-traders and whales—that is, those who hold a lot of it for a long time or have been savvy enough to sell before significant declines,” reported Mat Di Salvo for Decrypt.
The Bank for International Settlements report points out another important factor that could be contributing to the renewed long-term view of bitcoin. In bygone bull markets for the digital currency, many smaller investors entered the market at or near tops. They then endured substantial, short-term declines and sold near bottoms, experiencing big losses.
As a result, chastened market participants that still believe in bitcoin may be more apt to take a buy-and-hold approach this time around. That could also serve the objective of taking some of the volatility out of the crypto market — a segment known for bouts of turbulence.
“Dormant coins actually become ‘increasingly unlikely to be spent’ after a 155-day holding period, Glassnode has previously said. The analytics firm noted in its report today that such activity has been previously observed in prior bear markets, ‘potentially signaling a perception that the market is oversold’—meaning it may be poised for a rebound,” according to Decrypt.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.