Investors are likely holding back the purchased Bitcoins to play on raising its price shortly. This was reported by the analytical Glassnode company.
According to the study, more than 60% of Bitcoins mined during the year were inactive, that is, they were not used for transactions. This strategy has already worked perfectly in 2016 after the second half-bitcoin Bitcoin and many investors expect a repeat of this market model. In just one year after halving the reward, the bulls tremendously raised the price of Bitcoin. In 2017, a strong and long uptrend was recorded.
HODLing investors were not even able to scare the collapse of Bitcoin prices in March and the fluctuation of the market behavior of the flagship cryptocurrency in April. Despite all the troubles, Bitcoin was able to demonstrate its viability and survive in difficult market conditions. This is exactly what long-term investors have relied on, who did not succumb to mass panic and did not sell their cryptocurrency reserves.
The strategy aimed at holding Bitcoins once again confirms the prevalence of optimistic attitude towards cryptocurrency on the part of investors.
Why is Bitcoin’s market capitalization criticized?
Within the crypto community, the question of the accuracy of data related to the market capitalization of Bitcoin is regularly raised. This indicator is calculated based on the total number of coins and the price of the crypto asset for a certain period. But there is an important nuance that is not taken into account when providing information: a large amount of Bitcoin remains inactive, that is, it does not take part in everyday life and is held in users ’wallets.
Analyzing this problem, Coin Metrics proposed its version of assessing the market condition of a crypto asset. The company’s experts believe that it would be advisable not to take into account Bitcoins that do not take part in everyday life to calculate its market capitalization. For the new calculation method, they proposed a name, “realized capitalization”.
How will this indicator be calculated? The indicator will be formed based on the sum of the prices of coins that are involved in everyday life and which remain “sleeping” in users’ wallets. For example, if the coin last participated in a transaction in 2017, the price that was in the current period is taken for the calculation. According to Coin Metrics, this way the market condition of Bitcoin will be more accurate and transparent.
This article is intended as a news item to inform our readers of various events and developments that affect, or that might in the future affect, the value of the cryptocurrency described above. The information contained herein is not intended to provide, and it does not provide, sufficient information to form the basis for an investment decision, and you should not rely on this information for that purpose.