Bitcoin HODL Waves
Hi all dear traders!
Today we are going to talk and explain the basic fundamental stuff about Bitcoin HODL Waves, some important key values and how the overall supply impact the market trend.
Let's start!
HODL Waves take the entire supply of coins by categorising it out by lifespan and then developing a series of age bands which could be 24 hours to a month or 1 year to 2 years and so on. Moreover, we categorise the entire supply depending on when each UTXO (aka Unspent Transaction Output) was created. All existing Bitcoins have UTXO, therefore all Bitcoins have an age, however, this age tracks not from the first mined bitcoin, but when it was last used in a transaction.
Fine? Okay, let's dive deeper!
How can we distinguish and understand the coin supply age? Well, by categorising coin supply by lifespan, it provides us with a relative view on the age of the supply which gives a clear picture where a proportion of old coins versus young coins make a change in the trend of these bands along with accumulation patterns which happen on the market.
A) Relative supply age (proportion of the old coin vs young coins)
B) Macro spending accumulation pattern
Key values:
A) Let's assume that younger bands are expanding in size with a larger proportion of supply, what does it tell us? What happens with some of those older coins? You're right, older coins are being spent which mean they are turning from old to new what has a big impact on liquid supply (obviously, it's increasing).
B) Now it's your turn to guess what happens with younger coins when older bands expand. Are investors in an accumulation mode? Young coins get mature by day and months and move into old coins.
MUST KNOW: Warmer colours represent younger coins at the bottom, while cooler colours show us multi-year-old coins. Keep in mind that coins that have been dormant for over 10 years highly like already been lost.
So, if we look at warmer bands up to 6 months we see that during periods of market volatility older coins are likely to be spent into market strength and gain some profits. Contrarily, as the market follows the bear trend we see a reduction in those young coins which means those coins are going into dormancy, therefore accumulation behaviour prevails. During the bull market, long term investors tend to spend their old coins to gain some profits, converting them from an old state to a young state, where you can see increasing the warmer colours of the hodl waves.
Older coins tend to be reduced during the bullish market, and during the bearish market, we get swelling of these older bands as those younger coins essentially mature to become older over time.
Now, let's take a look at the current situation with Bitcoin.
Let's check the last news from Cointelegraph:
"Despite strong gains and equally strong corrections in 2021, those who entered the market or added to their positions in or after November 2020 are refusing to sell.
Hodl Waves, which tracks the age distribution of unspent transaction outputs (UTXO), show that the supply controlled by those six-to-12-month “hodlers” has increased — from 8.7% at the start of June to 21.4% as of Nov. 17.
At the same time, coins held for multiple years have decreased only slightly, highlighting that modest selling has taken place and that, except for the six-to-12-month group, investors’ resolve remains steadfast."
As Cointelegraph reported, only a few BTC owners intend to sell at current prices, even as these circle all-time highs.
So the group of 6-12 months traders (21,408%) have the intention to sell but long term holders still keep their coins and refuse to sell during the current peak.
P.S. inspired by Glassnode tutorial
Today we are going to talk and explain the basic fundamental stuff about Bitcoin HODL Waves, some important key values and how the overall supply impact the market trend.
Let's start!
HODL Waves take the entire supply of coins by categorising it out by lifespan and then developing a series of age bands which could be 24 hours to a month or 1 year to 2 years and so on. Moreover, we categorise the entire supply depending on when each UTXO (aka Unspent Transaction Output) was created. All existing Bitcoins have UTXO, therefore all Bitcoins have an age, however, this age tracks not from the first mined bitcoin, but when it was last used in a transaction.
Fine? Okay, let's dive deeper!
How can we distinguish and understand the coin supply age? Well, by categorising coin supply by lifespan, it provides us with a relative view on the age of the supply which gives a clear picture where a proportion of old coins versus young coins make a change in the trend of these bands along with accumulation patterns which happen on the market.
A) Relative supply age (proportion of the old coin vs young coins)
B) Macro spending accumulation pattern
Key values:
A) Let's assume that younger bands are expanding in size with a larger proportion of supply, what does it tell us? What happens with some of those older coins? You're right, older coins are being spent which mean they are turning from old to new what has a big impact on liquid supply (obviously, it's increasing).
B) Now it's your turn to guess what happens with younger coins when older bands expand. Are investors in an accumulation mode? Young coins get mature by day and months and move into old coins.
MUST KNOW: Warmer colours represent younger coins at the bottom, while cooler colours show us multi-year-old coins. Keep in mind that coins that have been dormant for over 10 years highly like already been lost.
So, if we look at warmer bands up to 6 months we see that during periods of market volatility older coins are likely to be spent into market strength and gain some profits. Contrarily, as the market follows the bear trend we see a reduction in those young coins which means those coins are going into dormancy, therefore accumulation behaviour prevails. During the bull market, long term investors tend to spend their old coins to gain some profits, converting them from an old state to a young state, where you can see increasing the warmer colours of the hodl waves.
Older coins tend to be reduced during the bullish market, and during the bearish market, we get swelling of these older bands as those younger coins essentially mature to become older over time.
Now, let's take a look at the current situation with Bitcoin.
Let's check the last news from Cointelegraph:
"Despite strong gains and equally strong corrections in 2021, those who entered the market or added to their positions in or after November 2020 are refusing to sell.
Hodl Waves, which tracks the age distribution of unspent transaction outputs (UTXO), show that the supply controlled by those six-to-12-month “hodlers” has increased — from 8.7% at the start of June to 21.4% as of Nov. 17.
At the same time, coins held for multiple years have decreased only slightly, highlighting that modest selling has taken place and that, except for the six-to-12-month group, investors’ resolve remains steadfast."
As Cointelegraph reported, only a few BTC owners intend to sell at current prices, even as these circle all-time highs.
So the group of 6-12 months traders (21,408%) have the intention to sell but long term holders still keep their coins and refuse to sell during the current peak.
P.S. inspired by Glassnode tutorial
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