HODLers Adapt as BTC Prices Fall to $35k Levels

The escalating Russian-Ukrainian conflict has weighed heavily on global markets. Bitcoin’s price is highly volatile as a worldwide macro asset with open markets. This week the market fell to $35,258 before quickly rising to $40,023.

After six months of declines from the November ATH, many Bitcoin investors’ confidence is shaken, especially those who bought near the top. This article will look at possible top buyer departures and compare the current market structure to May-July 2021.

Current Participants of the Bitcoin Market

Those who purchased at the top have almost entirely surrendered now. The remaining holdings appear to be significantly more steadfast, perhaps reflecting their unwavering belief in the Bitcoin HODLers. HODLers are cryptocurrency investors who buy and maintain their positions regardless of the market’s changes or directions.

The coin distribution skewed significantly “top-heavy” from May 2021 through July 2021, with a large supply coming in at around $54k and $60k. It created a fragile market with numerous people who bought at top levels and who would be nervous about any price movements downwards.

Source: Glassnode

In the end, the market cracked to $29k levels. The on-chain traffic on the Bitcoin network dropped, and it may be said that this was the commencement of the current bear market.

During this 2.5-month consolidation period, major buyers moved a lot of supply into markets for sale. More new committed customers subsequently absorbed this supply, with the pricing of Bitcoin increasing from $29k to $40k.

Source: Glassnode

This can be seen as a large-scale weak hand to strong hand redistribution of the coins.

During the rise from July 2021 to the November All-Time High, a remarkable equitable distribution of the currency supply was formed. This distribution shows:

  • Many investors who had accumulated during the May-July slump took profits on the way back up. This resulted in volume nodes worth $35,47k and $62k.
  • New buyers felt the price was an attractive value for investment throughout the August to November boom and entered the market. Even though on-chain activity indicated that most market tourists” had left, and just the HODLers remained.

Recent trends

We can see that much of the November supply is still in place from current trends. Despite a 50%+ fall, these HODlers haven’t sold.

Also, HODLer investors who acquired bitcoin in the $60k+ area around the all-time high have bought again in the $35k-$38k range.

This spending pattern represents a market dominated by price agnostic HODLers hesitant to sell even at a loss. Meanwhile, elite buyers have been largely weeded out, and their share of the market participation has shrunk from May July 2021.

Source: Glassnode

What can be concluded from this behavior of HODLers

Bitcoin HODLers’ behavior is remarkably positive despite the uncertain macro and geopolitical backdrop. Top buyers have mostly moved out of the network, and HODLers dominate the market. 

Over 335k BTC is currently moving into “3 mth+ ages”. This is 12.2x times the amount of coin production by miners daily.

HODLing behavior of similar size was seen in mid-2020 and June-September 2021; significant upside surges followed both.

Coins continued to be taken from exchanges and moved into increasingly illiquid wallets. These look like going into Extra Long-Term future holdings.

Now we can lookout for signs of reversal of this hoarding pattern, which could suggest a general lack of confidence. In the absence of such a reversal, these data suggest a positive and bullish future for Bitcoin.