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21 October, 2024

Bitcoin HODL Fever: Record Stash as Investors Refuse to Sell

21 October, 2024

Bitcoin HODL Fever: Record Stash as Investors Refuse to Sell

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The world of crypto investing is a dynamic one, with various strategies emerging as Bitcoin and other digital assets continue to evolve. While some investors focus on identifying the next ‘meme coin’ poised for a bull run, a significant portion adheres to the tried and true method of buying and holding, commonly known as ‘HODLing.’ This approach has proven its staying power, particularly for Bitcoin, the largest cryptocurrency by market cap.

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Recent data from on-chain analytics firm Glassnode reveals a compelling trend: Bitcoin has more holders than ever before. The firm’s analysis indicates a steady increase in Bitcoin’s illiquid supply over recent months, signaling that more users are choosing to hold onto their BTC rather than sell or trade it on the market. This trend is not only observed in the realm of individual investors, but also extends to institutions, highlighting the growing confidence in Bitcoin’s long-term value.

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Data Points to Increasing HODLing Activity

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Market data and holding signals paint a clear picture of growing investor confidence in Bitcoin. Crypto Banter, a prominent crypto news source, highlights the gradual increase in BTC’s stored supply over the past months. The website attributes this trend to a strong ‘HODLing vibe,’ suggesting that a market rally is on the horizon. This sentiment is further reinforced by Glassnode’s data, which shows a clear trend of increasing stored supply and declining active supply.

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Glassnode’s stored supply metrics encompass long-term holder supply, BTC held or lost coins, and the coin’s illiquid supply. In contrast, active supply metrics include exchange balances and short-term coin supply.

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Exchanges Witnessing a Decline in Reserves

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The gradual but steady reduction in Bitcoin’s available supply strengthens the thesis put forth by several analytics firms. The decline in highly liquid and liquid BTC supply began in 2024, indicating a shift in investor behavior. Glassnode’s data reveals a dip in the number of lost or missing Bitcoin compared to the beginning of the year. Additionally, CryptoQuant reports a decline in Bitcoin reserves held on centralized exchanges. These reserves, currently at 2.64 million BTC, hover around their all-time low following a significant drop in November 2023. Exchange reserves typically indicate selling pressure, leading to price declines. However, the recent trend suggests that investors are increasingly opting for a buy-and-hold strategy, preferring to accumulate Bitcoin rather than trade it.

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Institutional Interest Fuels Bitcoin’s Growth

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The rising number of Bitcoin holders isn’t solely driven by individual investors. Financial institutions and other large-scale investors are increasingly showing interest in this digital asset. Research conducted by River Financial in September revealed a remarkable 30% increase in BTC usage in one year and a staggering 587% increase since 2020. This analysis further suggests that institutional investors currently hold approximately 8% of all available Bitcoin.

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Many investors view Bitcoin as a potent hedge against inflation and a valuable tool for diversifying their portfolios. River Financial highlights the significant BTC holdings of US companies, currently valued at $19.7 billion, representing over 49% of their total assets. The growing demand for Bitcoin ETFs further contributes to the cryptocurrency’s burgeoning popularity. Currently, the cumulative value of BTC assets stands at a substantial $66.11 billion. This substantial growth in both individual and institutional ownership underscores the confidence in Bitcoin’s long-term potential.