The behavior of Bitcoin HODLers has these tips for your next trade

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The behavior of Bitcoin HODLers has these tips for your next trade

Long-term investors holding Bitcoin [BTC] are more inclined to keep their BTC rather than spend it, even in the face of rising prices, a new report from CoinShares revealed.

In a previously published article report, Coinshares discovered that new investors were singling into the Bitcoin market, with every halving. Hence, laying the groundwork for a new bullish cycle. As its price rises during bullish cycles, the coin gains popularity, leading to more investment.

According to its new report, Coinshares hypothesized that when BTC investors go through a full cycle and enter a bear market, they refrain from selling their coins below the buy price.

By holding onto their coins, they limit the supply, which Coinshares says creates “downside support…during the price decline, until they finally find profits on the next rally where many are starting to sell”.

When these investors finally make a profit, their success encourages a new generation of long-term holders who are brought into the Bitcoin market and then go through the same cycle as their predecessors.

Source: Coinshares

Like your fathers before you

As noted above, new investors enter the BTC market with each halving. After the first halving event in 2012, BTC purchased by new market entrants in early and late 2013 lay dormant for five years.

This “hodling” by these long-term investors has led to a restriction of the supply of the king coin. This, coupled with the halving in 2016, contributed to BTC’s rapid price growth in 2017. When these investors made profits, new investors entered the market in 2017.

CoinShares found that investors who bought BTC in 2016 and 2017 continue to hold as these coins have lain dormant in their addresses.

According to the report, this category of investors preferred to keep their assets rather than sell even above their acquisition cost. In this regard, CoinShares said,

“We are now seeing the same pattern, having run its course for coins traded at high bitcoin prices in 2017, where a new era of investors chose to resist the urge to sell their coins despite the possibility of realizing earnings at any time in 2021. This provides some explanatory power for bitcoin’s price increase following the 2020 halving when the available supply of bitcoin was again constrained, while also suggesting that the class d 2017 bitcoin investors carry similar conviction to that initiated in 2013.”

Source: Coinshares

Additionally, CoinShares found that the long-term investor class that entered the market in 2017 “seems to be hoarding their coins even more aggressively than we’ve seen in previous cycles.”

According to the report, while some investors sent their BTC to exchanges for profit during the 2021 rally, exchange outflows have outpaced inflows since 2022. Thus, indicating that 2017 long-term buyers are staying true to their detention.

Source: Coinshares

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