Network data shows an increase in HODLing among Bitcoin retail investors who expect BTC to recover in the first quarter of 2021
More investors do HODL in Bitcoin in anticipation of a 2021 high MARKET NEWS
New data shows that current Bitcoin ( BTC ) price action is showing higher levels of ‘HODLing’ activity than previous bullish cycles.
According to the Willy Woo network analyst, an indicator called ‘reflectivity’ has been increasing in recent months. Woo explained that the indicator measures the tendency of Bitcoin investors to keep their BTC as its price rises. It is essentially an alternative way to assess the HODLing activity of retail investors.
Bitcoin market capitalization gain per dollar invested or reflectivity. Source: Willy Woo
This next race may eclipse the previous cycle
There are several reasons why retail investors may be holding onto their BTC even more than in previous bullish cycles.
Bitcoin price in flux: bulls target $11,500, bears want drop to $9,800
If Bitcoin goes up in 2021, most investors will see this as a high post reduction by half. Historically, BTC has recovered 12 to 15 months after each reduction by half, registering a new historic high each time.
Based on BTC’s tendency to rebound after halving, retail investors may be maintaining it as a strategy to prevent prices from being eliminated if a strong sustained rise begins.
Bitcoin has also shown a surprising level of resilience in several potential black swan events. After its initial recovery from the pandemic-induced crash in March, it remained above $10,000 despite several negative events.
More recently, the price of Bitcoin plummeted after the US Commodity and Futures Trading Commission (CFTC) accused BitMEX of violating the Banking Secrecy Act.
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After the CFTC announcement, the price of BTC fell below $10,500 but quickly recovered to the $10,700 support level. According to Woo, this is possibly due to the confluence of the two key factors. Woo explained :
“This [reflexivity] is the tendency for HODLers to hold their currencies harder as the price increases. I had expected reflectivity to increase during the mania phase of BULL markets, but it seems quite constant in the last two cycles … This cycle is interesting; reflectivity is increasing rather than static compared to the last cycles. Although we now need more invested capital to obtain similar% gains in price, the effect of HODLers holding currencies harder is amplifying the ‘number goes up’ per dollar invested. ”
On the way to the fourth quarter, industry executives believe that the US presidential election could benefit Bitcoin and positive HODLing data could further boost the price of BTC.
The US presidential election and the fourth quarter could push up the price of BTC
Industry executives and prominent investors in the cryptomaniac industry are predicting the next presidential election in November to benefit Bitcoin.
Unprecedented balance sheet shows Bitcoin’s appreciation above 180% in the first half of 2020 only
Su Zhu, the CEO of Three Arrows Capital, said a Democratic sweep would catalyse Bitcoin due to several macro factors. He also suggested that a second term for Trump could also benefit Bitcoin. He wrote :
“Biden is extremely optimistic for the BTC because the Democratic blue wave could inaugurate the unprecedented installation of the MMT agenda with weakness and corresponding dollar deficits. With this, Trump is also optimistic. ”
As the Cointelegraph reported earlier this week, traders, including Peter Brandt, believe that the longer-term charts point to a strong uptrend for Bitcoin. The combination of favourable techniques, strengthening fundamentals and increased HODLing activity could drive a BTC bullish run in 2021.