On-chain data shows a rise in HODLing among retail Bitcoin investors who expect BTC to rally in Q1 2021.
New data shows Bitcoin’s (BTC) current price action is showing higher levels of ‘HODLing’ activity than previous bull cycles.
According
to on-chain analyst Willy Woo, an indicator called “reflexivity” has
been increasing in recent months. Woo explained that the indicator
measures Bitcoin investors' tendency to hold onto their BTC as its price
rises. It’s essentially an alternative way to gauge the HODLing
activity of retail investors.
This next bull run may eclipse the previous cycle
There are several reasons why retail investors might be holding onto their BTC even more so than in previous bull cycles.
If
Bitcoin rallies in 2021, most investors would see it as a post-halving
bull rally. Historically, BTC has rallied 12 to 15 months after each
halving, recording a new all-time high each time. Based on the tendency
of BTC to rally after a halving, retail investors might be holding as a
strategy to avoid being priced out if a strong sustained rally begins.
Bitcoin
has also shown a surprising level of resilience throughout multiple
potential black swan events. After its initial recovery from the
pandemic-induced crash in March, it has stayed above $10,000 despite
numerous negative events.
Most recently, the price of Bitcoin slumped after the U.S. Commodities and Futures Trading Commission (CFTC) charged BitMEX with violating the Bank Secrecy Act.
After
the CFTC announcement BTC price fell below $10,500 but it quickly
recovered to the $10,700 support level. According to Woo, this is
possibly due to the confluence of the two key factors. Woo explained:
“This
[reflexivity] is the tendency of HODLers to hold onto their coins
harder as price increases. I had expected reflexivity to increase during
the mania phase of BULL markets, but it looks quite constant from the
last two cycles… This cycle is interesting; reflexivity is increasing
rather than static compared to last cycles. While we now need more
capital invested to get similar % gains in price, the effect of HODLers
holding onto coins tighter is magnifying ‘number go up’ per dollar
invested.”
Heading into the fourth quarter, industry
executives believe the U.S. presidential election could benefit Bitcoin
and the positive HODLing data could further buoy BTC price.
The U.S. presidential election and Q4 may push BTC price higher
Industry
executives and prominent investors in the cryptocurrency industry
foresee the upcoming presidential election in November benefiting
Bitcoin.
Su Zhu, the CEO of Three Arrows Capital, said a
Democratic sweep would catalyze Bitcoin due to various macro factors.He
also suggested that a second term for Trump could also benefit Bitcoin.
He wrote:
“Biden
is extremely bullish for BTC because democrat blue wave could usher in
unprecedented installation of MMT agenda w/ corresponding dollar
weakness and deficits. With that said Trump is also bullish.”
As Cointelegraph reported
earlier this week, traders including Peter Brandt believe higher time
frame charts point to a strong uptrend for Bitcoin. The combination of
favorable technicals, strengthening fundamentals, and rising HODLing
activity could buoy a BTC bull run in 2021.
source link : https://cointelegraph.com/news/more-investors-hodl-bitcoin-in-anticipation-of-a-2021-btc-bull-market
