Digital Asset Manager Grayscale says current investment patterns in Bitcoin mirror trends present in early 2016, when BTC kicked off an astronomical 4,400% rally to its all-time high in less than two years.
Phil Bonello, Grayscale’s director of research, reports that there is a growing number of investors holding on to their Bitcoin. In Grayscale’s Holder vs. Speculator Index, the percentage of holder coins – BTC that have not moved in one to three years – is on the up and up. Meanwhile, the percentage of speculator coins – BTC that have moved in the last 90 days – is on a decline, much like in 2016.
According to Bonello, an increase in holder coins is a potential bullish indicator, while an increase in speculator coins looks bearish.
Bonello also notes that there has never been a higher level of Bitcoin held for more than one year.
“This metric indicates a strong conviction in Bitcoin by its current investor base. While this is a supply-side metric, it also demonstrates the demand for Bitcoin’s use case as a store of value – rather than trading, it appears investors are interested in holding Bitcoin despite its volatility…
This report is intended to help investors visualize why Bitcoin may be more important than ever; we explore Bitcoin’s value indicators, delineate its substantial supply/demand imbalance, and extrapolate how these factors may create a tailwind for Bitcoin’s adoption and price. This analysis indicates that the current Bitcoin market structure parallels that of early 2016 before it began its historic bull run.”
The researcher does caution that significant off-chain activity may decrease the efficacy of these metrics.
Bitcoin’s price in January 2016 stood at about $434. In less than 24 months, the king crypto went on to skyrocket over 4,431%, en route to its all-time-high of $19,665, according to CoinGecko.