Why the Market is Thinking About Bitcoin Differently
The bull case for bitcoin is linked to the cryptocurrency’s limited supply of only 21 million coins. But scarcity is forming in another way, revolving around investor behavior.
According to research from Ark Invest, investors are holding onto bitcoin for longer and longer durations. By holding the asset rather than selling, it decreases the supply of coins available on the market at any given moment, which can drive up price. This suggests that market participants see the long-term value and potential future payoff the asset possesses.
In the past, durations of days and months were the most common holding periods for bitcoin investors, while holding for more than a year was practically non-existent up until recently.
|BTC Duration Held||% of BTC Supply|
|3 to 5 years||13.38%|
|2 to 3 years||10.99%|
|1 to 2 years||10.70%|
|6 months to 1 year||8.30%|
|3 months to 6 months||7.07%|
|1 day to 3 months||27.76%|
But days and months have now transitioned towards years.
Near the end of 2020, 57% of bitcoin supply has been held for at least a year. In fact, investors who have held for five years or (Read more...)