“Bitcoin is increasingly difficult to ignore,” says Glassnode in his report on the evolution of the market for the first cryptocurrency in the week of March 15-21. The study indicates that the supply in the hands of holders with a balance of less than 1 BTC (the “satoshis accumulators”) has grown 1.23% since 2018, while in the addresses with a higher balance, the supply varies little.
The supply figures in the hands of holders with more than 100 BTC have remained practically constant in the last 3 years, according to the report published this Sunday by CriptoNoticias.
In the following graph, Glassnode highlights the price evolution of week 12, shaded in blue, which highlights the maximum of USD 61,578 reached on March 13, and the minimum value of USD 53,686, reached on Monday March 15.
The price of bitcoin reached a new all-time high on March 13. Source: Glassnode.
Accumulating satoshis
In March 2018, addresses with a balance of less than 1 BTC accumulated 3.97% of the bitcoin supply. Since then, the corresponding supply has not stopped growing, according to the study. The holders that Glassnode calls “satoshis accumulators” have since accumulated an additional 1.23%, according to the study data, and currently have a total of 5.20% of the BTC mined so far.
The segment with balance of 0.1 at 1 BTC is the largest in this group. Source: Glassnode.
The graph shows 3 segments of holders . The largest, corresponding to the area in light green, has 4% of the supply and comprises the holders with balances between 0.1 BTC and 1 BTC. Those holders that have between 0.01 BTC and 0.1 BTC represent 0.99% (dark green). The rest, with a lower balance, do not reach 0.2%.
Whale hand supplies are kept with few changes
When including dolphins, designated by Glassnode as the holders between 100 BTC and 1,000 BTC, along with the largest holders , whales, these accumulate 62.62% of the bitcoin supply.
In this group are, in addition to dolphins (100-1,000 BTC), the whales themselves, with a balance between 1,000 BTC and 10,000 BTC, as well as humpback whales (between 10,000 BTC and 100,000 BTC) and a tiny group with a balance greater than 100,000 BTC.
Supply of holders with a balance of more than 100 BTC. Source: Glassnode.
The Accumulated supply by this group of large holders has remained almost unchanged since 2018 , as seen in the graph above. The total accumulated by the group is approximately 12 million BTC.
Bitcoin and the transfer of wealth between holders
The study states that, as part of a reorganization of cold wallets and bitcoin custodian deals, large balance wallets have experienced shifts of BTC between the various categories of holders . These categories are specified in the following graphic.
Glassnode identifies BTC holders with underwater species names. Source: Glassnode.
Just before the all-time high of $ 20,000 in mid-December 2020, roughly equal and opposite changes occurred in the largest balance sheets, he notes. Glassnode. The firm detected the following changes.
The supply in the hands of octopus and fish (from 10 to 100 BTC) decreased by 56,000 BTC.
Dolphins and sharks (100 to 1,000 BTC) increased their balance by 331,000 BTC.
Whales and humpback whales registered a decrease in their balance of 307,000 BTC.
Totaling the movements of BTC in those three cohorts, there is a slight decrease of 32,000 BTC, representing only 0.24% of the supply in the hands of these groups.
But, on the other hand, the accumulators of satoshis managed to increase their balance by 29,800 BTC , which would show a transfer of wealth to this group of holders.
Glassnode .
In the graph below, Glassnode summarizes the variation in supply for groups with balances between 10 BTC and 10,000 BTC.
Supply at addresses with a balance between 10 BTC and 10,000 BTC. Source: Glassnode.
The cyclical behavior of the holder
To analyze the cyclical behavior of the holder or retainer of BTC, Glassnode uses the metric called reserve risk , which he defines as “an advanced cyclical indicator that tracks the conviction of HODLers as we move through the cycles.”
Among the general principles that support Reserve Risk, is the fact that each coin that is not spent accumulates coin-days that measure how long it has been inactive. This is a good tool to measure the conviction of holders of “strong hands” , the study notes.
As the price increases, so does the incentive to sell and obtain these benefits. As a result, we typically see HODLers spending their coins as bull markets go. Stronger hands will resist the temptation to sell and this collective action generates an ‘opportunity cost’. Every day HODLers actively decide NOT to sell, increasing the accumulated unspent ‘opportunity cost’ (called HODL bank).
Glassnode.
Reserve risk represents the relationship between the current price (incentive to sell) and this accumulated ‘opportunity cost’ (HODL bank). In other words, reserve risk compares the incentive to sell to the strength of holders who have resisted the temptation , says Glassnode.
The chart below presents the Reserve Risk Oscillator currently at 0.008 with higher prior periods being in the blue band. Past cycle highs have typically occurred at values greater than 0.02, says Glassnode.
The reserve risk indicator can be used to predict the peak of the bitcoin bull cycle. Source: Glassnode.
As the price increases and / or more holders spend their coins, the risk of reserve will increase. This represents a ‘wealth transfer’ of BTC from long-term holders to new buyers.
Redistribution of bitcoin supply between holders
Bull markets follow a three-phase wealth transfer pattern, Glassnode notes.
Phase A – Maximum pain
In the following graph, Glassnode considers the relative proportion of supply in the hands of holders long-term (LTH, in blue), and holders short term (STH, in red). It also differentiates for each segment the coins that have gains (darker color) from those that are in loss (lighter color).
The first of the phases corresponds to the scenario of maximum pain, in which the maximum section of a segment of holders is in loss. This is the thickest light-colored area. LTHs begin to accumulate (at a loss) halfway into bearish territory, as seen in the area of increasing light blue.
Supplies in the hands of short-term and long-term holders. Source: Glassnode.
At the capitulation point, only 40% to 45% of LTH’s BTC make a profit, which corresponds to all cycles till the date.
Phase B – ‘ Peak HODL ‘ or HODL in peak
Location of the maximum proportion of BTC in profit, in the hands of LTH. Source: Glassnode.
As the bullish phase progresses, higher prices represent a greater temptation for holders to sell Glassnode argues. «At a certain stage the ‘Peak HODL ‘ is reached, which is a turning point where the largest proportion of BTC held by LTH is in profit. Usually this peak represents a new all-time high ”. sustains the document.
This is a reflection of the strength of the market, the improvement of conviction, the maturation of the asset class, the tools available to access liquidity and, by of course, exponential price increases and wealth generation.
While, in 2011, the Peak HODL was 55% of supply , in 2013 that parameter was 65% of this. Glassnode expects the potential peak of BTC accumulated for the next Peak HODL to be 75% of supply.
Phase C – Cycle stops
Reduction of supply in hands of the LTH, the largest holders , after having reached the inflection point, it has historically occurred before the maximum of the respective cycle.
Occurrence of the supply cap in the hands of the LTHs, before the maximum of each cycle. Glassnode font.
As Glassnode shows in the graphic below, the third phase has already started in the case of the current cycle. The supply in hand of the LTH has been 9%, while, in the previous cycles of 2011, 2013 and 2017, this decrease has been up to 17%.
Compared with 2017 , we would be in the middle of that BTC supply reduction, highlights the report. Both this evolution and the change of hands of BTC from “strong hands” towards holders more modest, are factors to watch carefully on the road to the culmination of the current bull cycle for bitcoin , says Glassnode.
According to analyst Willy Woo, bitcoin is still far from its maximum price within the current bull cycle, according to the review of that analysis published on Friday, March 26th hereby.
