Source: Glassnode
Like a modern Robin Hood
There's an ongoing trend that began in March 2018 (after the first "bubble" exploded) that is introducing more and more people to crypto and Bitcoin in particular. These retail investors are typically buying small portions of BTC and for this reason they're called "Sat Stackers", short for "Satoshi Stackers". This name derives from the fact that a single Bitcoin can be divided into 100 million small units, called Satoshi (from the name of the mysterious founder Satoshi Nakamoto).
In March 2018, Sat Stackers owned 3.97% of BTC total supply, while at the moment they own about 5.2%. This means +1.23% in 2 years, with a big boost on March 2020.
This trend demonstrates an increasing confidence in Bitcoin for the average buyer, and it seems like bitcoin is moving its "wealth" from large holders to small holders, like a modern Robin Hood.
Marine Life and Crowded Sea
Large Bitcoin holders (owning 10 or more BTCs) are classified using fish names:
- 10 - 100 BTC range holders are named Octopush and Fish
- 100 - 1000 BTC holders are named Dolphin and Shark
- 1000 - 10000 BTC holders are named Whale and Humpback
When the price started growing higher than 50k USD last month, a large amount of BTC were sold by Whales and Humpbacks, and they were bought by Dolphins and Sharks.
Meanwhile, Octopuses and Fishes were already selling their BTCs when BTC broke its previous ATH (All Time High - reached in December 2017).
The Cycle of Holding
Every coin that is not spent accumulates coin-days, and as price increases, the incentive to sell and realize good profits increases as well.
If we call HODLers LTH (Long Term Holders) and Traders STH (Short Term Holders), we can see there are cycles that follow bull markets and bear markets.
Phase A: Halfway into a bear market, LTHs start accumulating coins.
Phase B: In a bull market, higher prices create temptations for HODLers to sell coins. Peak HODL is the point where the largest proportion of LTH owned coins are in profit. Generally, this corresponds with breaking the previous cycle ATH.
We're seeing an increase in Peak HODL relative profit percentage. In particular:
- 2011 Peak HODL = 55% of supply.
- 2013 Peak HODL = 65% of supply (twice).
- 2021 potential Peak HODL = 75% of supply
Phase C: following the Peak HODL point, many LTHs sell their coins to get profits, and this represents a BTC 'wealth transfer' event from LTHs to newer speculators. This point usually re-activate a portion of dormant supply, bringing it back into liquid circulation.
Historically, this portion of supply was:
- 2011 Top: LTHs re-activated ~12% of supply.
- 2013 Tops: LTHs re-activated ~10% of supply for both peaks.
- 2017 Top: LTHs re-activated ~17% of supply.
The current cycle, instead, have re-activated 9% of supply so far.
Thanks for reading, let me know what do you think about it in the comments and feel free to share your experiences!
