Bitcoin investors shy away from short-term price fluctuations

Since the beginning of the Bitcoin Blockchain, around 18.08 million BTC have been mined. However, a tweet from the analyst Rhythm now suggests that trading in precisely those bitcoins has come to a standstill. In particular, the strong price fluctuations of the past months suggested that a large part of the available BTC was traded.

However, Rhythm shows that 11.58 million BTC – this corresponds to 64 percent of the available volume – has been in a wallet since 2018. Considering the development of bitcoin, this development is remarkable, because in 2019 alone the price of a BTC rose from $ 3,100 to $ 13,800. After this short-term bull market, the markets turned and corrected by 52 percent. On November 25, they finally reached a temporary low of $ 6,500.
Rhythm over crazy Hodler

Due to the latest developments, Rhythm describes the Hodler as crazy. The proportion of dormant BTC in the total supply has increased significantly in recent years. This trend remained intact throughout bull and bear markets. This development is an indication of the long-term investment horizon of investors. They want to invest regardless of the short-term return expectation and benefit in the long term from the potential of the most valuable cryptocurrency.


“Hodler of the last instance are crazy.” – Rhythm

The Hodler are a group of long-term oriented Bitcoin investors. The name of this investor group can be traced back to the Bitcoin investor GameKyuubi, who stuck to the currency in December 2013 despite strongly fluctuating Bitcoin prices. He made a typing error, so that “I am Holding” became the eponymous expression “I am Hodling”. The basic idea behind the Hodling is long-term participation in the performance of the BTC. A look at historical performance in particular shows that this approach has paid off.


Long-term profit expectations for Bitcoin

A special feature of BTC is the fixed supply and emission plan. It is already possible to estimate when the currency will reach the next halving. In addition, Nakamoto has defined a fixed maximum amount that cannot be changed. Accordingly, there is no central authority that can manipulate the current course.

Saifedean Ammous also deals with the value of cryptocurrency in the book “The Bitcoin Standard”. Ammous notes that investors with classic fiat money tend to spend it quickly. Above all, the economic system and the possibility of adjusting the offer of a currency help investors to stop saving. Rather, the continuous granting of credit promotes the urge of the consumer to spend money earlier. Government-sponsored inflation also ensures that purchasing power declines over the years.

Bitcoin investors, on the other hand, have a low time preference. This means that investors save for the future because the profitability is higher than with short-term trading.


Conclusion: Bitcoin is becoming an investment vehicle for long-term investors

Market observers often see speculation in cryptocurrencies like Bitcoin. However, Rhythm’s recent findings make it clear that this is not necessarily correct. Instead, 64 percent of the total number of Bitcoin has remained in investors’ wallets since 2018.

This development is somewhat surprising, especially when considering the market developments, because the currency has always marked new highs and lows in recent years. Consequently, the behavior of investors corresponds to the so-called Hodler approach. Saifedean Ammous’ thesis from the book “The Bitcoin Standard” also sees itself as proven by the behavior of investors, since investors hide short-term developments and act long-term.

Personally, I am somewhat surprised by the current development. I also expected that the majority of investors would rather focus on short-term developments and realize price gains. However, the coming halving could spur the BTC rate again and help the currency reach new highs. The increasing shortage of the maximum BTC number also contributes to a sustainable increase in value and should be reflected in the prices in the future.