Long-term investors are not selling most of their bitcoins. What do they expect from the market?
Investors who bought Bitcoins relatively long ago and have held them all along are in no hurry to part with most of their crypto-assets. Even despite the fact that Bitcoin has set an all-time high several times this year, long-term hoarders have only sold a small volume of coins. In other words, investors are counting on a further rise in the price of BTC, which at the same time seems quite likely. We tell you more about the situation.
Note that Bitcoin is now going through a drawdown phase after a fairly strong rise up to a local high of $52,088. The cryptocurrency then slumped to the $47.3 thousand zone in just overnight, which was the level that proved to be the bottom as of 1 a.m.
Hourly chart of Bitcoin’s exchange rate
Either way, investors are in no hurry to get rid of their cryptocurrency as they expect the market’s run to continue.
What Bitcoin investors are doing
Information on market dynamics can easily be tracked by the so-called Coin Days Destroyed (CDD) indicator, developed by analytics platform Glassnode. This indicator clearly shows how long bitcoins were idle before they were sold. In the chart below, the indicator shows a rapid rise at a time when long-term investors quickly start getting rid of large amounts of coins.
Coin Days Destroyed (CDD) indicator
The CDD thus divides bitcoins into "old" and "new". This classification is quite important as it gives an indication of market trends. Note how the CDD started to rise sharply at the end of 2017, which preceded the long "cryptozyma", when Bitcoin's price was constantly falling due to huge seller pressure. The CDD is now showing relatively little growth and is in the "green zone", meaning that the coins are mostly sold by those who bought them recently. To be more precise - within the last few months.
Another metric called Hodl Waves, developed by the experts at Unchained, confirms the CDD reading. In addition, it shows another interesting trend – coins are now being sold more often by those who bought them in the summer when the BTC rate sagged to $30,000.
Hodl Waves indicator
Finally, the last indicator is Hodler Net Position Change. According to it, long-term investors are now continuing to accumulate BTC. This trend was formed at the end of November and is likely to continue into the first quarter of 2022, according to Cointelegraph experts.
An indicator of bitcoin accumulation by investors
Sellers of their coins are counting on a rapid rise in their value in the future. And it looks like their predictions have every chance of becoming reality. According to a crypto-enthusiast under the pseudonym FilbFilb, Bitcoin’s price could well reach the $300,000 line as early as next year. Here’s FilbFilb’s commentary, published by sources.
To get into the $300,000 zone after a parabolic rise, we will probably need a “perfect storm”. This is a situation where the Fed fails to raise lending rates, combined with higher inflation leading to a capital transfer to Bitcoin.
That is, the analyst suggests that for Bitcoin and other cryptocurrencies to grow in popularity, the authorities must clearly show a lack of control over the economy. This became quite evident as the coronavirus spread in the spring of 2020, when due to massive lockdowns and lack of need for manpower, governments began closing holes in the economy by printing new portions of currencies. The consequences of such a decision are now tangible, with many countries facing inflation not seen in decades.
Bitcoin forecast to rise to $300,000
The cryptocurrency enthusiast has attached a chart of global price movements to his statement, which has so far perfectly signalled waves of growth and decline in BTC. While this prediction sounds very optimistic, the experience of 2021 shows that the growth rate of the crypto market could indeed be unprecedented.
In any case, we once again remind that this scenario is just one possible version of market development, which could easily fail to come true. That means investors still need to do their own analysis of the coin niche, invest only what they are prepared to lose in case of an eventuality, and be mindful of risk-limiting tools.
We think that the prediction of Bitcoin growing to 300K over a few months seems too fairy tale. Firstly, in that case, the market capitalization of BTC would be $5.67 trillion, which is more than twice the current capitalization of the entire market. Secondly, between autumn 2020 and April 2021, the main cryptocurrency has already managed to grow from $10,000 to $64,000. Consequently, another portion of a six-fold increase from the current price seems likely except for the next global coin niche growth cycle. And it will hardly come without a long phase of correction.
What do you think about it? Share your opinion in our Millionaire Crypto Chat. We’ll talk about other topics related to the decentralized asset market there as well.
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