On-chain data from the market analysis firm Glassnode shows the level of Bitcoin “HODLing” activity has spiked to levels unseen for more than three years.

The number of circulating bitcoin that has not moved for over two years reached 8 million, which suggests more users are holding bitcoin with a longer-term outlook.

A Bullish Data Point, Especially Because It Coincides With a Halving Year

Bitcoin undergoes a mechanism called “block reward halving” every four years. A halving - as the name suggests - halves the amount of bitcoin rewarded to miners upon mining a block, thereby slowing the pace at which Bitcoin reaches its maximum supply of 21 million.

Scarcity is among the main characteristics that make Bitcoin a promising store of value, alongside fungibility, decentralization, and portability. Halvings increase Bitcoin’s scarcity factor, which has led to long-term bull markets following the previous two halvings.

As an example, the last halving occurred on July 9th of 2016, and at the time, Bitcoin was priced at around $663 on Bitstamp. Within 15 months, Bitcoin surged to as high as $19,891 USD, recording a 2,820% gain.

The increase in the number of addresses HODLing bitcoin follows the third block reward halving on May 11th. Data suggests that investors might be accumulating bitcoin based on previous bull cycles that followed every halving. Researchers at Glassnode wrote:

“Increased Bitcoin investor HODLing behaviour: The circulating [sic] BTC supply that hasn't moved in at least 2 years is now at 44% (8M BTC) – a level we haven't seen in over three years. In the past year this metric has increased by 10 percentage points.”

The percentage of addresses holding bitcoin for over two years. Source: Glassnode

Another metric that shows growing HODLing behavior, called the HODL wave, also hit a new record high according to crypto market data provider Cryptowatch. HODL wave, an on-chain indicator created by LookIntoBitcoin, evaluates addresses that have not moved Bitcoin for over a year.

Clear Inverse Correlation

Bitcoin’s HODLing activity chart shows a clear inverse correlation with its weekly price trend.

Throughout 2016, before the rally to Bitcoin’s all-time high in December 2017, the number of HODLing addresses continuously increased, then  substantially declined after Bitcoin hit its record high, falling from around 40% to less than 34% of all addresses. 

Based on historical Bitcoin market cycles and its inverse correlation, data suggests investors might be anticipating a newfound Bitcoin uptrend in the longer term.

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