Crypto asset investors hold for longer as market confidence grows
Investors are holding their crypto assets longer than they are used to before trading them for profits, according to new insights from Glassnode.
In the insight, the investors held the various crypto assets for a record 155 days, which means from early November 2020 when the price was rallying from $16,000 up to the $18,000 consolidation before breaking last cycle’s all-time high.
Also, Bitcoin purchased between $10,800 and $58,800 now represents 25 percent of the total supply with no sign of slowing down. Glassnode notes in earlier research that HODLed (a term for crypto assets held by investors who are not speculative) coins are beginning to mature, and continued outflows from exchanges demonstrate accumulation is not slowing down.
Cryptocurrencies are mostly seen as speculative assets due to their high volatility rate. Hence, many investors who come into the market are mainly looking to buy and sell as soon as they can record profits. Not many are open to holding on for a very long time.
“Many people often lie that they have held onto their crypto assets,” Ejovwoke Enakirerhi, CEO of Bittle Nigeria said at a crypto forum in Lagos. “The truth many people love to trade for profit.”
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But since the price of bitcoin and other cryptocurrencies started to go up steadily, the number of investors holding on to them is going up. Glassnode has observed this trend to the point it now has a class of Long Term Holders (LTHs). Once a coin ages (HODLed) beyond 5-6 months, it is increasingly likely to remain dormant and is reclassified as a Long term holder (LTH) coin once lifespan exceeds 155 days.
The proportion of coins maturing from 1-week to 6-months old has been growing since November 2020. These are coins accumulated in the early bull market that has remained dormant since.
The total BTC supply held by LTHs has also started trending higher after a period of net distribution and spending. This metric further reinforces that on aggregate, more coins are remaining dormant and HODLed by strong hands, than are being spent by LTHs to realise profits.
Glassnode says the longer the investors are willing to hold on to their crypto assets is not only a sign of maturity but also of their conviction about the fundamentals of the market.
The Glassnode insight aligns with similar research by Arcane in March which found that long-term bitcoin holders have been adding to their positions over the past 10 months as supply held for shorter time periods shrunk.
This is a trend that exchanges such as Luno say it has also seen. The company offers a savings wallet that enables users to earn interest of about 4 percent to 7 percent annually on their crypto assets.
The Luno Savings was introduced in October 2020 as a feature that allows users to save their crypto assets at an interest rate of ~4 percent per annum. As of 8 March 2021, the exchange said it has over 250,000 users saving with the wallet and who have also be paid over $500,000 worth of Bitcoin (BTC) in interest.
The price of bitcoin is currently above $55,000 while other cryptocurrencies like Ethereum hit new price milestones at over $3000 over the week. While speculators continue to dominate activities, the growing influence of institutional investors is believed to be behind the recent growth in the market.
Growing long-term holder sentiments could support the broader growing trend in bitcoin, whose prices have nearly doubled in 2021.
“The bitcoin supply last being active in three to five years has grown by 1.5 million BTC since the middle of May 2020,” Arcane Research noted. “This suggests that long-term holders still accumulate bitcoin, not seeking to sell at these current prices.”
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