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The new data shows that the current price trend of Bitcoin (BTC) shows a higher level of “hoarding” activity than the previous bull cycle.
According to on-chain analyst Willy Woo, a metric called “reflexivity” has been on the rise in recent months. Woo explained that this metric measures the propensity of bitcoin investors to continue to hold their bitcoins when the price of bitcoins rises. In essence, it is another way of measuring the stockpile of retail investors.
Bitcoin market capitalization gain for every dollar invested. Source: Willy Woo
The next bull market may surpass the previous cycle
Compared with the previous bull market cycle, retail investors hold Bitcoin for several reasons.
If Bitcoin rises in 2021, most investors will see it as a bull market after the halving. Historically, Bitcoin has risen 12 to 15 months after each halving, setting a record high each time. According to the rising trend of Bitcoin after the halving, retail investors may use Bitcoin holding as a strategy to avoid being unable to buy it due to excessively high prices after a round of strong continuous rise.
Bitcoin has shown amazing resilience in multiple potential black swan events. After an initial rebound from the crash caused by the pandemic in March, it remained above $10,000 despite many negative events.
Recently, after the US Commodity and Futures Trading Commission (CFTC) accused BitMEX of violating the Bank Secrecy Act, the price of Bitcoin plummeted.
After the CFTC announced the news, the Bitcoin price fell below $10,500, but soon recovered to the $10,700 support level. Woo believes that this may be due to a combination of two key factors. He explained:
“This (reflexivity) means that when prices rise, hoarders are more inclined to hold their tokens. I previously expected reflexivity to increase during the frenzy of the bull market, but from the perspective of the past two cycles , It has been very stable. Compared with the previous cycle, the reflexivity of this cycle is increasing rather than unchanged. Although we now need to invest more funds to achieve similar price increases, hoarders strictly hold bitcoin The impact of currency is magnifying the return of every dollar invested.
Entering the fourth quarter, industry executives believe that the US presidential election may be beneficial to Bitcoin, and active hoarding of coins may further boost Bitcoin prices.
The U.S. presidential election and the fourth quarter may push up Bitcoin prices
Industry executives and well-known investors in the cryptocurrency industry predict that the upcoming presidential election in November will be beneficial to Bitcoin.
Three Arrows Capital (Three Arrows Capital) CEO Su Zhu said that due to various macro factors, democratic elections will promote the development of Bitcoin; he also believes that Trump’s re-election may also benefit Bitcoin. He wrote:
“Biden is extremely good for Bitcoin because the Democrats may launch an unprecedented MMT agenda amid a weaker U.S. dollar and fiscal deficits. Having said that, Trump is also good for Bitcoin.”
As Cointelegraph reported earlier this week, traders including Peter Brandt believe that a longer time frame chart indicates a strong upward trend in Bitcoin. Favorable technical factors, strong fundamentals and growing coin hoarding activity may drive the Bitcoin bull market in 2021.