The HODL Theory And Its Relevance With Bitcoin

The HODL story for Bitcoin [BTC] has slowed down recently. The market has changed in favor of quick gains, which has hurt Bitcoin’s performance. Especially in terms of its capacity to meet medium- to long-term goals.

In the past six months, Bitcoin’s price action has been confined to the lower range after failing to reach its mid-term targets. This is true even though there was a significant discount at the time and significant accumulation during drops. There hasn’t been much upward, and then more downside. As a result, long-term investors have been unable to continue making money. The 180-day Market Value Realized Value (MVRV) ratio for Bitcoin, which has been negative for the previous six months, is evidence of this result.

The six-month total supply of profit for bitcoin is currently at its lowest level. The decline throughout this year demonstrates that HODLers who purchased Bitcoin earlier are still in the red. Additionally, it supports the idea that investors who made more recent purchases near the June lows made some money in the short term. The prevailing opinion is that quick profits have been more favorable regarding Bitcoin’s profitability. This result implies that significant purchasing pressure in recent months was restricted to the limited upside.

An uncommon benefit

The strategic adjustment in favor of short-term chances may have been influenced by Bitcoin’s robust recoveries following each dip. Because Bitcoin is currently focused on short-term profitability, it is now simpler to anticipate sell pressure and price floors. For instance, the price range of around $20,000 has shown considerable demand during the retest of 2017 highs. Additionally, Wyckoff accumulation and distribution are shown in this result.

Macroeconomic circumstances heavily influence the current inclination for short-term gains. The hawkish attitude of regulators has been exerting pressure on the cryptocurrency and commodities markets. As a result, the chances of a significant bullish recovery shortly have diminished.

Also Read: Bitcoin and the semantics of Property Rights

So, it’s only temporary

Despite short-term profit-taking, many investors are still stocking up in anticipation of a long-term rebound. Long-term hodlers are still investing by dollar-cost averaging, especially when the bear market is nearing its end. Additionally, given that holding at lower prices will restrict its downside, Bitcoin may be close to the floor price of its current cycle.