When it comes to crypto ownership, it’s more than obvious that not all crypto users are equal.
Some only dabble in crypto briefly and invest small amounts of money into it, while other more daring investors go all in and put a lot of time, effort and funds into expanding their crypto holdings. Nowhere is this discrepancy more noticeable than in the case of Bitcoin.
People have always flocked to exchange platforms like Binance to buy Bitcoin and add it to their investment portfolios, hoping they’ll make a profit out of it, but not all of them have been persistent in their attempts.
Many have sold or traded it when the time seemed right and cleared their Bitcoin holdings.
However, certain investors never lost hope and held on to their assets despite the frequent price fluctuations experienced by the flagship crypto. It seems that the dominance of the latter has increased recently as their share of the Bitcoin supply reached a new record high.
According to recent data provided by the blockchain analytics firm Glassnode, the total BTC amount held by long-term Bitcoin holders now stands at 14.599 million BTC, the largest figure ever registered so far.
This means that nearly 75% of Bitcoin’s total circulating supply is now in the hands of long-term holders.
Getting acquainted with Bitcoin holders
There is more than one way to categorize Bitcoin users based on different criteria such as purpose, the amount of assets they possess, or the trading and investment strategies they adopt. But users can also be classified by the amount of time they’ve held on to their coins. Based on this criterion, Bitcoin users can be separated into two main groups: long-term holders (LTHs) and short-term holders (STHs).
STHs are users who have purchased their coins more recently, usually within the last six months. They’ve generally spent less time in the market and don’t have as much experience as LTHs, and are therefore more prone to making rash decisions and selling their assets when FUD affects the crypto market.
On the other side, we have long-term Bitcoin holders. These are addresses that have been holding coins for at least 155 days. Past patterns show that this category of holders is less likely to sell or trade their funds than investors who have acquired coins more recently. The probability of selling decreases with the passing of time, so basically, long-term holders are HODLing.
For those who are not familiar with the term, HODL is a widespread concept in the crypto community which refers to a popular investment strategy adopted by many crypto investors, not just Bitcoin supporters. It implies buying and keeping crypto assets indefinitely, come hell or high water. HODLers are not frightened or influenced by wild price swings and continue to keep their assets in their accounts, hoping for future appreciation.
The origins of the term can be traced back to a Bitcointalk forum post titled I AM HODLING. The users obviously meant to say they were holding on to their coins, so it all started as a mere spelling mistake that caught on pretty fast. Since then, crypto investors adopted the term as an abbreviation for hold on for dear life, which makes perfect sense considering that in general, the strategy of maintaining investments for a longer period of time tends to be safer and more profitable than engaging in short-term trades.
What does the trend of long-term holding indicate?
The steady rise in the percentage of the total Bitcoin supply held by the LTHs shows that many Bitcoin owners are less eager to sell and choose to keep their assets for extended periods of time. This means that the HODLing mentality is still going strong despite Bitcoin’s price crash during the last crypto winter. Bitcoin lost almost 65% of its value in 2022, falling from a record high of $68,990 to a low of $15,760. Overall, the entire crypto market lost a little over $2 trillion, so it was a brutal winter, to say the least.
However, Bitcoin and the altcoins have taken the road to recovery in 2023, giving crypto fans renewed hope of a fresh start and a potential bull run in the future. An 83% gain helped Bitcoin reach a high of $31,035 in the current year and eventually settle around a level of $ 29,383 at the time of writing.
The price appreciation experienced by the king of crypto since the beginning of the year may have served as a strong motivation for long-term holders to keep on holding and an encouragement for newer users to do the same. Once again, this proves that Bitcoin’s potential as a store of value is not disregarded by stakeholders and continues to play an important role in the decision-making process.
Beyond the price increase in the first months of the year, Bitcoin volatility also dropped to a record low recently. These past weeks have been unusual calm for Bitcoin, with its price moving sideways, showing no sign of bullish or bearish trends. Historically, periods of low volatility occur after a bear market has passed and are followed by a phase of accumulation.
Taking all these factors into account, we can conclude that there’s been a shift in market sentiment over the past months as traders and investors have a more positive outlook of the market. Bitcoin users are feeling less pressure to sell and trust the coin to make a full recovery in the near future.
Wrapping up
There are many investment strategies one can use in the crypto trading world, each one of them with its own pros and cons.
However, it appears that HODLing has remained a preferred method to build wealth for many investors and continues to dominate the crypto space today.
With long-term holders controlling almost three-quarters of the Bitcoin supply at the moment, it’s obvious that Bitcoin hasn’t lost its shine and is still as coveted as ever.
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