On March 3, Coin Metrics published its “State of the Network” update which covers the BTC network by leveraging various perspectives and data sets. Within the report written by Jacob Franek, the researcher discusses unspent transaction output (UTXO) age analysis and HODL waves.
News.Bitcoin.com first reported on the subject of HODL waves in April 2018, after Dhruv Bansal, the cofounder of Unchained Capital, published an in-depth report on the subject. Essentially, Bansal and his team described how they analyzed the BTC network’s UTXOs over the course of a few years and figured out how to measure distinct holding periods. A bitcoin UTXO represents the unspent funds stemming from bitcoin transactions and this data is recorded on the blockchain.
When Coin Metrics analyst Franek discussed the subject in the latest update, he noted the earliest contribution to this field was when the term “Bitcoin days destroyed” was first defined.
According to a report written by Coin Metrics analyst Jacob Franek, as of March 1, 2020, roughly 42% of all BTC has not moved onchain in more than two years. The metric is the largest number since June 2017 and the study notes that “HODL waves” have grown larger.
42% of All the Bitcoin in Existence Has Not Moved in Two Years
“In our opinion, this area of the literature remains one of the promising areas in which more foundational discoveries can be found”, Coin Metrics analyst Jacob Franek writes in the latest “State of the Network” update. “The unifying theory behind this approach to valuing cryptoassets is that different cohorts of holders may have differing motivations, risk tolerances, informational advantages, and sentiment depending on their holding time preferences.”
Franek noted other contributions to the study of HODL waves in 2014 and the writer mentioned Bansal’s 2018 research as well. Unchained Capital’s post on the subject was “instrumental in introducing active supply to a broader audience”, Franek wrote. Two more studies were mentioned (Blummer 2018 and Hauge 2019) in Coin Metrics’ report, both of which research the behavior of bitcoin holders from different angles. When mentioning Franek’s study, fellow Coin Metrics researcher Nate Maddrey explained that 42% of all BTC hasn’t moved in two years. “As of March 1st, about 42% of all BTC has not been moved on-chain (i.e. transacted) for at least two years”, Maddrey tweeted. The analyst added:
The amount of BTC untouched in more than two years has not eclipsed 42% since July, 2017.
The HODL waves chart shows 42% of BTC has been left unspent for two years. “The greens and blues represent Bitcoin that hasn’t transacted in a long time”, explains the HODL Wave chart website. “Bitcoin’s money supply grew from 50 BTC to ~17M BTC over this time period, so the chart has been normalized by the BTC in existence at each date (left y-axis).”
Unchained Capital has a live chart that shows all the bitcoins in existence and waves are defined by Bitcoin Age Days (BADs). Essentially, the colored coded chart calculates waves of age distribution within BTC’s identified UTXOs and their age distribution set back to the genesis block in 2009. “The colored bands show the relative fraction of Bitcoin in existence that was last transacted within the time window indicated in the legend”, the Unchained Capital HODL waves chart notes. “The bottom, warmer colors (reds, oranges) represent Bitcoin transacting very recently while the top, cooler colors (greens, blues) represent Bitcoin that hasn’t transacted in a long time.”
A recent Reddit post from the subreddit r/btc, called “Iron Hands”, showing holders composition by time held indicates BCH is around 92%. The data stems from Coinmarketcap.com’s new chain analysis feature. The website shows the live numbers for BTC, ETH, and BCH.
The ‘Iron Hands’ of Bitcoin Cash Holders and the Upcoming Reward Halvings
BTC holders are not the only crypto proponents storing their coins for long periods of time. A recent post on the Reddit forum r/btc called “Iron Hands” compares three different cryptocurrencies (BTC, ETH, and BCH) using Coinmarketcap.com’s new chain analysis feature. According to the screenshot and Coinmarketcap.com statistics, the holders’ composition by time held shows that BCH is around 92%, while BTC is 63% and ETH is 54%.
“Interesting that a higher percentage of BCH users are using bitcoin cash as a store of value than BTC users”, Bitcoin.com’s executive chairman Roger Ver wrote in response to the thread. “BCH isn’t just a store of value, it’s a great medium of exchange. And like any currency, financially responsible folks will spend some and save some”, explained another BCH proponent on Reddit. Data from charts.Bitcoin.com shows the UTXO Set Size for the BCH network is 68 million, while statistics from the BTC network’s UTXO Set Size are around the same.
The great hodling of BTC and BCH has been taking place just before both networks experience the block subsidy halvings. The BTC chain has 9,819 blocks left to go (at the time of writing) and 68 days left until the halving on or around May 11, 2020. The BCH chain has 5,001 blocks left to go and 34 days left until the halving on or around April 8, 2020.
