As the Bitcoin (BTC) price continues its upward trajectory in 2023, the cryptocurrency landscape is witnessing the reemergence of long-term holders or ‘hodlers’ in South Africa and beyond, according to the most recent analytics data.
Philip Swift, the mind behind the renowned on-chain data resource LookIntoBitcoin, identified patterns reminiscent of the behaviour of established BTC investors during bullish market phases, on July 13th. Regardless of the persistent discussions about the peak that BTC’s price could achieve during the current cycle, one element remains steadfast: the behaviour of Bitcoin ‘hodlers’ remains unchanged.
The significant surge in the BTC price in 2023, which has seen the cryptocurrency’s value more than double, has prompted an increase in on-chain spending velocity. This suggests that profit-taking activities are in full swing in South Africa and the rest of the global crypto landscape.
To provide context, Swift presented a graph of the Value Days Destroyed (VDD) Multiple, an indicator derived from the Coin Days Destroyed (CDD) metric. Essentially, the VDD measures the inactivity duration each time BTC moves on-chain and juxtaposes it with the current BTC price. This results in a 30-day comparison with the 365-day average. Interestingly, the current cycle aligns closely with previous ones in terms of on-chain spending volume, providing valuable insights into where we stand in the ongoing market cycle.
According to Swift, the VDD Multiple is an insightful tool in determining when older coins re-enter the market. Long-term participants are leveraging this as an opportunity to capitalise on the price surge during significant bull market cycles. In April 2023, the VDD Multiple reached a peak at 1.37, and it currently stands at 1.32. Swift interprets this as indicative of the “1st stage bull market”.
Glassnode’s lead on-chain analyst, Checkmate, lauded these findings. He emphasized the remarkable regularity of market cycles and human responses to similar market stimulants.
In addition, Glassnode’s data highlights an interesting trend: the allure for ‘hodlers’ to cash out at current prices. The Bitcoin market-value-to-realized-value (MVRV) ratio for long-term holders (LTHs) and short-term holders (STHs) indicates that both groups have seen significant profits.
LTH coins, which are defined as those dormant for at least 155 days, are now worth 1.52 times more than when they were last moved. In contrast, STH coins have seen a value increase of 1.12.
Previous reports have underscored the significant influence that STHs wield on BTC price trends. As both long-term and short-term holders find themselves in profitable positions, the ramifications of these trends on BTC’s price movement, particularly within the South African context, remain a subject of anticipation.
The unwavering behaviour of BTC ‘hodlers’ in response to market conditions alludes to the current cycle following a similar path as those prior. The developments in South Africa’s BTC market remain closely tied to these global trends, making it an interesting space to watch for local and international investors alike.