Where’s all the Bitcoin? Ask the HODLers.

05 Apr, 2021
Where’s all the Bitcoin? Ask the HODLers.

Let’s do the math.

The total number of Bitcoin (BTC) is currently about 18, 672, 225 coins.

That’s 89% of the total 21 million coins that can be mined in the finite Bitcoin universe.

And in the past week, $52 Billion in BTC was traded daily on average, which represents less than 5% of the total market cap of more than $1.3 Trillion.

So where’s the other 95% of the coins?

Ask the HODLers, those who bought BTC and are holding on as the price of the world’s first digital currency continues to move toward new highs.

Good news for the “HODLers,” as those who hold onto their coins are called.  And that group appears to be increasing as the price of the coin reaches all time highs and the rest of the world appears to have caught Bitcoin fever.

“We can see this from tracking the flows of coins out of the exchanges, where typically people speculate or buy and sell their coins, and they have a set inventory, some of which is allocated for speculation. We’ve just seen an unprecedented amount of depletion of that inventory,” said Bitcoin trader and analyst Willy Woo in a recent interview.

CoinMarketCap’s analysis of the net flow of coins in and out of the market supports that view.  “When exchanges experience a greater outflow of Bitcoin, this could be indicative of traders and investors moving Bitcoin out of exchanges to hold in private wallets (cold storage),” the site states.

That appears to be what a BTC “whale” did on Saturday, when more than almost 12,000 BTC worth $703 million was moved by the giant HODLer. “So far, the cryptocurrency does not appear to be heading to any known crypto exchange addresses, where it could be sold on the open market,” reported the dailyhodl.

Recent research by Gred Cipolaro and Dr. Ross Stevens of New York Digital Investment Group supports numerous analysis of the current whereabouts of Bitcoin.

“The researchers said blockchain activity shows that investors are holding Bitcoin for longer periods,” Newsweek reports. “ A total of 63.2% have owned the coins for at least one year, 44.6% for two years and 32.3% for three years.”

The activity by the two-year HODLers is of particular interest, according to the research firm Glassnode. “This trend indicates that Bitcoin HODLers who bought around the top of the last bull cycle in 2018 and before are showing deeper conviction as BTC consolidates above $55,000.”

Beyond the HODLers, there’s a second force at work that’s impacting the Bitcoin supply:  institutional investors who only recently began acquiring vast amounts of the coin.

"Increasing fundamental demand combined with a fixed supply and automatically declining supply growth make a compelling case for Bitcoin as an alternative investment for institutional investors,"  conclude Cipolaro and Stevens.

Just how much BTC is being snatched up by these investors? “Exchange-traded bitcoin investment vehicles now have more than 800,000 BTC under management, equaling 4.3% of the circulating bitcoin supply,” tweeted Vetle Lunde of  Arcane Research. “Since New Year's Eve, more than 100,000 BTC have been absorbed by bitcoin funds!”

And who else is HODLing?  Bitcoin Miners.

“…as CryptoQuant CEO Ki Young Ju explained, miners are holding a lot of Bitcoin that they have not sold in recent months,” reports CoinTelegraph. “In fact, the amount of BTC moved by miners was significantly less compared to previous pullbacks this year. This may suggest that miners are likely expecting higher prices down the road.”

So, with all of this HODLing going on, when can traders expect to see more Bitcoin available in the open market?

“The analyst (Woo) expects the market to see a supply crunch even more drastic than the one which caused the flagship cryptocurrency to rise in price by roughly 2,000% in 2017,” the dailyhodl reported.

Which could be why even newcomers who bought BTC in the last 12 months are hanging on. “Many are on their way to becoming classified as long-term holder (LTH) coins,” Glassnode said in its weekly newsletter. “These are the first signs of a new generation of HODLer, those who were forged in the dynamic market realities brought on in 2020 and 2021.”

So if you’re ready to buy BTC, it’s best to stay on your toes and look for opportunity. Because when it knocks, there are many more traders, investors and miners waiting in line with you as the first digital currency continues to capture mindshare in this increasingly digital economy.

Joyce Pavia Hanson