Bitcoin (BTC) HODLer volume marked previous highs and the beginning of bull cycles. Since the dominant cryptocurrency is $ 30,000 on the way, HODLer activity could be a useful tool to potentially measure the next high of BTC.
Since October, as Cointelegraph reports, Bitcoin’s HODLing activity has been steadily increasing. Fewer HODLers have shifted their holdings, indicating an overall positive market sentiment.
Why HODLer Activity is Important to Assess Bitcoin Sentiment
The term “HODLer” refers to long time holders of Bitcoin. It is possible to track the activity of HODLers by evaluating addresses that BTC has not been moving for several years.
If HODLers move their assets as the price of Bitcoin rises, it could indicate an intention to sell to make a profit on the rally.
Conversely, if HODLers move their assets when the Bitcoin price falls, it could mean they double their investments.
Consequently, given the price trend of Bitcoin, an increase in HODLer activity may indicate that a major price movement is imminent.
HODLer volume tentatively indicates that a prolonged withdrawal of Bitcoin is unlikely to happen. The volume remains low compared to previous peaks, which shows that the confidence of year-long containers is still high.
However, the HODLer volume may lag behind and begin to increase as the price of Bitcoin falls in the short term. If this is the case, the possibility of an extensive correction may still arise.
As such, it would be important to observe the HODLer volume in the short term, especially if Bitcoin is struggling to rise to above $ 30,000.
The technical momentum has increased the price of Bitcoin over the past few months. But if it slows down, HODLers could sell, with the expectation that a correction will take place due to the large number of investors who have unrealized gains.
BTC becoming scarcer is a variable
Until the HODLer volume is higher than previous highs, it would be premature to predict a significant decline in the short term.
Several macro factors, such as the declining dollar and the decline in Bitcoin liquidity, have made BTC more attractive as a value store, especially for institutions.
Cointelegraph previously reported that Bitcoin is becoming less liquid due to the increasing HOLDER activity.
This means that there is less BTC to buy or sell, making BTC scarcer than it is heading in 2021.
Rafael Schultze-Kraft, the CTO of Glassnode, stressed that it is bullish for Bitcoin in the long run. He said:
‘One of the most important #Bitcoin cards in 2020. Liquidity is shattered, investors accumulate, accessible BTC becomes scarcer. 1M BTC did not become liquid this year, ie is owned by institutions that spend