Newly released data from Coin Metrics shows that the number of un-moved Bitcoin has risen to a new high. Does this mean Bitcoin is a better store of value or does it still have potential as a medium of exchange?
Is HODLing Bitcoin Back in Style?
Today, crypto-analyst and Tales From the Crypt podcast co-host Matt Odell noted that the amount of untouched Bitcoin has grown significantly over the past five years. Odell referenced a Coin Metrics chart which shows Bitcoin’s ‘untouched supply’ recently reaching a new all-time high. Untouched coins are those which have not been transferred from a wallet, and the chart measures Bitcoin held for 180 days to 2 years.
The data suggest that BTC is steadily becoming more of a store of value than a medium of exchange, but the significance of this suggestion various depending on one’s reason for acquiring Bitcoin. Those in the ‘Bitcoin to $100k’ camp will use the data to support the belief that Bitcoin is entering a bull market that will take it well above its previous all-time high.
Others, like Willy Woo, might express concerns that the lack of Bitcoin circulation could lead to a decrease in volatility that could make the asset mirror the price action of commodities like gold. Earlier today, Adaptive Capital partner and crypto-analyst Willy Woo tweeted a chart of gold’s price action over the past century and asked:
Essentially, Woo projected his concern that if the majority of BTC becomes held by a few wealthy hands, then this group will become the “new bankers”. The fact that Bitcoin has a limited supply and large institutional investors steadily accumulated cryptocurrency throughout 2018 means there is a degree of credibility to Woo’s concern.
Will the ‘Untouched Supply’ Continue to Rising?
Tuur Demeester quickly countered Odell’s tweet by saying, “I’m not so sure… 5 years without updating your cold storage method is a long time in Bitcoin. IMO most of these coins are likely lost.” Closer investigation of Coin Metrics chart shows that there has been a noticeable uptick in the amount of ‘untouched coins’ on the 180-day and 1-year timeframe when compared against longer-time frames and this growth corresponds with Bitcoin’s price increase in USD.
CoinMetrics also pointed out that:
Although the size of the BTC supply has been consistently growing, the percent of the overall supply of BTC that has been untouched for at least five years also recently reached a five year high of 21.6%
If one takes the data from Coin Metrics literally, then it seems sensible to assume that as Bitcoin’s price continues to increase so will the number of untouched coins. Although there is the possibility that long-term holders who bought BTC at its $20,000 peak onto $16,000 could be looking to exit their positions as the digital asset approaches previous all-time highs. It’s likely these holders will be influenced by the strength of Bitcoin’s future rallies and its technical setup as it reaches these previous highs.
Do you think the number of unmoved Bitcoin will rise as Bitcoin’s value increases? Share your thoughts in the comments below!
Image via Shutterstock, Twitter @Woonomics, Matt_Odell