How has Bitcoin investors’ ‘ideology’ evolved since 2016?

The future of Bitcoin is a topic of discussion that has gained relevance and steam over the course of the year. Regardless of whether the crypto asset goes through a bullish rally or a bearish correction based on metrics, fundamentals, or sentiment, speculation that predicts the asset's future has always kept the community busy.

One of the key trends that has sparked various debates about the future of BTC in 2020 is user hodling activity. In fact, it had previously been reported that certain groups of hodlers remained extremely optimistic despite the recent sell-off that caused Bitcoin to drop to $ 9,150.


Source: Twitter

However, some cryptanalysts in this area remain confident that today's investor confidence and behavior in the Bitcoin market will bring long-term benefits to the world's largest digital asset.

A current Twitter thread by Rafael Schultze-Kraft, CTO at Glassnode, explained some of the metrics that expanded this narrative. When Kraft spoke about the hustle and bustle in the market, he found that the average number of coin days destroyed had fallen in the past 5 years since 2016.

Coin days destroyed or CDD is defined as the processed Bitcoin volume multiplied by the number of days since the coin was last moved. A lower CDD is usually a sign of the presence of long-term hodlers.

Force added

"Bitcoin as well The number of binary coins destroyed (= number of days per year on which more coins were destroyed compared to the historical average) has never been as low as in 2020. "


Source: Twitter

Bitcoin's reserve risk at the time of writing also indicated that the Bitcoin market had an attractive risk-reward ratio for its investors, with a low ratio indicating higher market confidence.

Long-term hodling; just a change in the type of user?

Before we conclude that Bitcoin users have evolved over time, we need to understand the initial functionality of the crypto asset. Bitcoin was initially faster in the chain, which meant that the asset was over-the-counter and was used to purchase goods and services.

However, over time, off-chain speed takes precedence as the intra-exchange movement becomes more relevant and people only use BTC to either buy other coins or convert to USDT when the market declines.

In fact, recent research reports are clear specified This was a sign that Bitcoin was viewed more for speculative reasons, which meant that users were more drawn to the presentation of an improved rating in the future than their current utility.

Instead of evolving, it can therefore be speculated that new users will enter the room because BTC is more lucrative than spending it on services or goods.

It remains to be seen whether Bitcoin will be profitable based on these indicators, but it is quite possible that the current number of Bitcoin investors will not share the same ideology as yesterday's investors.

Your feedback is important to us!

Source link

Be the first to comment

Leave a Reply

Your email address will not be published.