January 22, 2021

Surfing HODL Waves: 2020 Review

2020 is over and forever imprinted on the Bitcoin blockchain. And although it was a very stormy year, probably for around the world - the COVID-19 virus, protests and riots inin many cities and countries, lockdowns and quarantines, central banks printing money with tenfold power, challenging the results of elections in the United States - if we turn away from all this noise and look at the changing mood of bitcoiners, then this year seems ... quite ordinary.

HODL waves are visualization of on-chain data, inwhich, in the form of colored bars, represent the percentage of the total supply of bitcoin and the length of time these coins are "stored" at the last address. Such visualization is possible due to the absolute transparency of the Bitcoin blockchain. You can read more about HODL waves here. By comparing the "age" of the coins on the addresses to the current BTC / USD exchange rate, some interesting assumptions about the Bitcoin economy and holer sentiment can be made.

Price crash in 2020 and the low point of the HODL cycle

Let's recall some of the main events2020 year. Except for a wild 60% collapse and a rapid recovery in March 2020, HODL waves for the year look exactly as one would expect from a young global currency, and bear quite a lot of similarity with both the 2011-2013 wave and the 2014-20 wave. 2017

The March drop was sharp, but on the chartit can be seen that the coins moved between addresses at that time were stored at the last address for less than 6 months. And this suggests that the collapse was likely caused by the liquidation of open positions by traders with leverage. Long-term owners were not affected by this movement, which means that coins held at the same address for more than 6 months began to account for a higher percentage of the total amount of bitcoins held at addresses. This may partly explain the rapid two-month recovery to the previous price level.

The highest value of long-term ownership of thisthe cycle fell on September 27, 2020, when 63.35% of the total Bitcoin supply (~ 11.74 million BTC) did not change addresses for more than a year at a price of $ 8251. The price ended the year at $ 29,000, while the situation began to change and the share of long-term held coins by December 31, fell to 59.03%.

59.03% of bitcoins held for more than 1 year -this is still far from the low point of the previous cycle, which occurred on April 10, 2018 at $ 6,839 / BTC (after rising from $ 172 in January 2015), when only 41% of the available coins were held for 1 year or longer. If the HODL wave 2018–2020 resembles the previous one, we can expect new extreme price movements, as new entrants will try to win back this ~ 18% difference between 59.03% and 41.1% of long-term held bitcoins.

November 2018 surrender forged "hands of steel"

Zoom out slightly to seeHODL-wave 2018–2020 As a whole, we can see that the 2018 surrender, when the BTC price fell from ~ $ 6,000 to cycle lows of around $ 3200, came from a significant percentage of the 3-5 year band. 2.43% of all bitcoins, or about 423,000 coins, were moved after being at the same address for 3-5 years, and shorter-term coins were moved during the price crash.

The vast majority of bitcoinsliquidated in November 2018, was acquired and held by long-term owners who, as the graph shows, emerged at the end of 2020, when the 2 to 3-year holding space expanded 3.4%, or approximately 630,000 bitcoins. The November 2018 sale was the last capitulation of the 2017 bull market at ~ $ 20,000.


January 2021 has already burst into a wild start and onAt the time of writing, the price skyrocketed to $ 40,000 / BTC, which is consistent with historical data on bitcoin price movements compared to hodlers' sentiment at that time. Each block is found every 10 minutes, time passes and Bitcoin continues to work as intended, but people's understanding and demand for BTC is constantly fluctuating.

Bitcoin continues to make history during its monetization.

Thanks to friends at Glassnode Studio for supporting the rendering of HODL waves. I look forward to a vibrant 2021 and beyond for Bitcoin.