A leading digital asset manager says the recent trend for bitcoin (BTC) investors to hold long-term reveals two key pieces of information.
In the latest weekly digital asset fund flow report, CoinShares highlights how, unlike bitcoin’s previous quadrennial cycles where investors moved their BTC across exchanges to take profits, the “class of 2017” sold less in 2021 than expected.
“In both bull runs of 2013 and 2017, large positive net inflows coincided with decreasing Bitcoin price levels (and decreasing average coin age), suggesting that many long-time Bitcoin owners have took profits during the cyclical recovery.
Recently, however, we have seen that while some investors have indeed decided to move their coins to exchanges and make gains during the market peaks of 2021, exits from exchanges have greatly exceeded inflows. This suggests that a longer term trend is in place. »
CoinShares also notes that almost a quarter of bitcoin supply remains dormant, and the next wave of demand from new investors could propel the king of cryptos up the price charts once again.
“The lack of influx to exchanges since 2020 indicates that the 2017 class of Bitcoin investors are perhaps the most steadfast savers of any group initiated by the market halving events.
With 24% of the circulating supply (or, 4.6 million BTC) now idle, as well as the trending decrease in exchange liquidity, investors can be encouraged that any event catalyzing significant new demand from investors would likely accelerate the price of bitcoin. »
The data analytics firm says the long-term holding trend suggests bitcoin may have shifted from being a speculative asset to one for preserving wealth.
“We think what we’re seeing is that users are increasingly using bitcoin as a long-term savings tool, and less as a short-term speculator.
It also suggests an increase in perceptions of system maturation and a reduction in perceptions of systemic risk among users who seem increasingly comfortable with using bitcoin as a longer-term store of value. »
The company adds a caveat, pointing out that the financialization of bitcoin through mainstream investment vehicles means that people are now able to gain exposure to BTC without directly owning the asset.
“Prudent investors should, however, watch for changes in market structure that dilute the effects of any bitcoin supply restrictions, such as increased evidence of rehypothecation or market exposure to synthetic bitcoin products. »
At the time of writing, bitcoin is down a fraction and trading at $21,535.
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Bitcoin’s unorthodox trend could trigger demand for BTC and accelerate the price, according to crypto asset manager CoinShares. – Essonne Info
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