Hodl on! After being held 3 months, Bitcoins are rarely sold again

Bitcoin (BTC) is so hoarded that only 5% of the coins that are being moved have been held for more than three months.

According to a report published on March 15 by on-chain data firm Glassnode, “more than 95% of spent outputs are younger than 3 months old.” In other words, nearly all those who acquired Bitcoin decided to hold it for over 90 days. And once held that long, they rarely move again.

In its research, Glassnode divided Bitcoin owners between long-term holders who own coins more than 155 days old, and short-term holders owning coins younger than that. The firm discovered that “once a coin passes our 155 day threshold to become a LTH held coin, it is increasingly unlikely to be spent on a statistical basis, often only coming back to life during volatility and at higher prices in bullish markets.”

This can be seen as good news for Bitcoin broadly, since it means that price pressure will build as the supply of bitcoins for sale stays tight, and that prices will be more stable than previously anticipated as most of the coins are not held by short-term speculators who get spooked by minor price fluctuations—although “minor” in bitcoin terms is still a lot.

While Bitcoin just saw a record price drop of more than $5,000 in six hours, at $55,000 it is still 10 times its price from a year ago after an historic bull run.

As Modern Consensus’ morning Markets Report noted today, commentator Lex Moskovski pointed out that strong holders have increased their buying volume in the last few days, as bitcoin dropped from its $61,000 all-time highs. He added:

“Their positions change has never turned negative for almost 3 months. They have added ~10m (bitcoins).”

Glassnode assumes that long-term holders are more knowledgeable about Bitcoin and are more confident in its potential compared to short-term holders, so they accumulate cheap coins in bear markets and only sell at high prices in bull markets. Short-term holders are assumed to be newer market participants and traders who often move value between exchanges. This category is more sensitive to price fluctuations.

“As bull markets carry on, LTHs will transfer some portion of their BTC wealth to STH whilst some STH will ‘stack sats’ and hodl their coins to eventually mature into LTHs,” the report added.

More buying pressure can be expected soon, according to a recent report, which predicted that a great deal of money from the just-passed United States stimulus program will be spent on bitcoin—with the potential to further increase Bitcoin’s market cap—which remains north of $1 trillion, despite the recent priced drop—by another 2% to 3%.

Updated March 17, 2021 to reflect correction in headline.