Right now, we are witnessing the highest hodling concentration of Bitcoin since June 2017, with 42% of Bitcoin not moving for over 2 years.
For those that are not aware, HODL Waves means periods of time when heavy Bitcoin accumulation happens. This is monitored through Bitcoin UTXOs (Unspent Transaction Outputs). The UTXO is created whenever block rewards are received by a minor. As Bitcoin is spent, UTXO becomes an input. Any change is then sent back to the spender as a completely different UTXO.
Every single BTC transaction is made out of inputs, which are spent BTC and UTXOs, which are unspent BTC. Through UTXO analysis, it is possible to gauge the amount of Bitcoin that is hodl’d by the investors. This is done by analyzing the period between when the UTXO is used and now. If the time period is long, it practically indicates long-term saving and cold storage.
A cryptocurrency valuation report was published by Coinmetrics. The valuation metric used was UTXO age analysis and Coinmetrics discovered that on march 1, 42% of the UTXOs for BTC did not move in the past 2 years or more.
Ever since June 2017, this is the highest that the number was. June 2017 is an important moment since this was shortly before the bull run that led Bitcoin to its all-time highs. Basically, the indication might mean that Bitcoin is moving towards another all-time level this year.
The HODL Waves are identified by BADs (Bitcoin Age Days). Simply put, when the Bitcoin UTXO is labeled as not spent for one month, it has a BAD of 30 or 31. When spent on day 30, 30 BADs end up destroyed.
2 major Bitcoin HODL Waves exist. The oldest one shows BTC that was not moved in over 5 years. These are practically the HODL stashes owned by Bitcoin OGs, early adopters and the first people that minerd BTC.
HODL Waves also include lost coins or the coins that were lost because of losing private keys, which happened a lot during the early years of Bitcoin. According to Chainalysis, which is a forensics service for blockchain, around 4 million BTC was permanently lost.
The second HODL Waves sees UTXOs from between 3 and 5 years. This mostly includes new adopters as Bitcoin started to reach headlines, with the first major bull run, the one that led to $1,200.
Wave 3 includes the UTXOs between 18 and 24 months. This includes investors that did not do much during the bull run but bought BTC during the crypto winter period.
Because hodlers increase, scarcity becomes magnified. This always aids the upside price pressure. This is especially the case due to the incoming halving. This will reduce how much new BTC will be produced. Prices can easily end up exploding.