Diamonds Hands: 75% of Bitcoin Unmoved for Six Months, Data Shows

TLDR

• Approximately 75% of all circulating Bitcoin has not moved in 6 months or more
• This high percentage of dormant Bitcoin suggests a strong trend of holding among investors
• Over 80% of short-term Bitcoin holders (those holding for less than 155 days) are currently at a loss
• The Bitcoin Fear & Greed Index is at 28, indicating fear in the market
• Bitcoin price recently topped $60,000 but has since retreated to around $58,600

Recent blockchain data reveals a significant trend in Bitcoin holding patterns, with approximately 75% of all circulating Bitcoin remaining unmoved for six months or more. This statistic, derived from Glassnode’s HODL Waves chart, provides insights into investor behavior and market sentiment in the volatile cryptocurrency space.

The HODL Waves chart, which uses blockchain data to visualize Bitcoin held in wallets based on the time since it last moved, shows that around 74% of Bitcoin has been stationary for most of 2024. This is despite the asset falling 21% from its all-time high, suggesting a strong conviction among long-term investors.

This holding pattern represents a notable increase from just a week ago when around 45% of circulating Bitcoin had not moved in the same period. The substantial rise in dormant Bitcoin indicates that many investors are viewing the cryptocurrency as a long-term store of value, possibly anticipating future price appreciation.

The prevalence of long-term holding has significant implications for Bitcoin’s market dynamics. As more Bitcoin remains locked up in wallets, the liquid supply available for trading decreases. This reduction in available supply could potentially lead to price appreciation if demand continues to rise, creating a scenario where increased scarcity drives up value.

However, the market presents a complex picture when considering different types of investors.

On-chain analyst James Check highlighted in a recent social media post that over 80% of short-term Bitcoin holders are currently underwater. Short-term holders, defined as those who have held Bitcoin for fewer than 155 days, acquired their holdings at prices higher than the current market value.

Right now, over 80% of #Bitcoin Short-Term Holders are underwater, meaning their coin was acquired at a price above the current spot price.

This is similar to 2018, 2019, and mid-2021 which signalled many investors were at risk of panicking, and precipitating a bearish trend. pic.twitter.com/8jM7PBqh5z

— _Checkmate 🟠🔑⚡☢️🛢️ (@_Checkmatey_) August 19, 2024

This situation bears similarities to market conditions observed in 2018, 2019, and mid-2021, periods that were characterized by investor panic and bearish trends. The high percentage of short-term holders at a loss raises concerns about potential panic selling, which could exert downward pressure on Bitcoin’s price.

CryptoQuant’s weekly report suggests that Bitcoin miners might be facing a capitulation event. The report noted a surge in daily miner outflows, reaching 19,000 BTC during the week of August 5. Miners may be compelled to sell their reserves due to squeezed profit margins, which have fallen to 25%, the lowest since January 22.

The overall market sentiment remains cautious. The Crypto Fear & Greed Index, a popular sentiment indicator, currently registers a score of 28 – deep in “fear” territory. This level of fear has not been seen since December 2022, reflecting the current uncertainty in the cryptocurrency market.

Despite these challenges, Bitcoin’s price action has shown resilience. The cryptocurrency recently topped $60,000 in late weekend trading, although it has since retreated to around $58,600 at the time of writing. This volatility underscores the dynamic nature of the cryptocurrency market.

The high percentage of Bitcoin being held for extended periods suggests a strong belief in the asset’s long-term value proposition among a significant portion of investors.