Bitcoin “Reserve Risk” Metric Approaches All-Time Lows

Data shows the Bitcoin “reserve risk” indicator has recently plunged down and is now reaching all-time lows only seen back in 2015 bear and the March 2020 COVID crash.

Bitcoin Reserve Risk Suggests HODLing Relative To Price Is Strong

According to the latest weekly report from Glassnode, BTC investors have been holding strong onto their coins despite the large decline in the crypto’s price recently.

Before looking at what the “reserve risk” indicator does, it’s best to get an understanding of a couple concepts first.

A “coin day” is accumulated in the market for each 1 BTC that stays unmoved for a day. The sum of such coin days in the entire market can tell us about how dormant the long-term holder supply has been.

Because of this, the sum of coin days can be an effective way of measuring the conviction of hodlers in the Bitcoin market.

However, there is another way to interpret the coin days and hence the LTH conviction; as Glassnode explains:

Stronger hands will resist the temptation to sell and this collective action builds up an ‘opportunity cost’. Every day HODLers actively decide NOT to sell increases the cumulative unspent ‘opportunity cost’ (called the HODL bank).

The other idea of interest here is the incentive that these LTHs have to sell right now. It is measured through the current price of Bitcoin.

Whenever the price goes up, hodlers become increasingly tempted to realize their profits, and hence the incentive to sell goes up.

Related Reading | First In History: Bitcoin Mayer Multiple Records Lower Value Than Last Cycle’s Low

Now, the reserve risk models the ratio between this “incentive to sell” and the cumulative “opportunity cost” (explained above) of the long-term hodlers. Below is the chart for the indicator.

The value of the indicator seems to have sharply declined recently | Source: Glassnde's The Week Onchain - Week 26, 2022

As you can see in the above graph, the Bitcoin reserve risk has gone down in recent days and is now approaching all-time lows.

This suggests that despite the plunging price of the coin during 2022, BTC investors have still been holding strong onto their coins.

Related Reading | Bitcoin Monthly Tags Lower Bollinger Band, Tool’s Creator Hints At Bottom

The last time such low values of the metric were observed was back in the late 2015 bear market and the March 2020 crash.

BTC Price

At the time of writing, Bitcoin’s price floats around $20.9k, down 1% in the past week. Over the last month, the coin has lost 27% in value.

The below chart shows the trend in the value of the crypto over the past five days.

Looks like the price of BTC has been consolidating sideways recently | Source: BTCUSD on TradingView Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com

from NewsBTC https://ift.tt/DvQVUSG
via IFTTT

Comments

TA: Ethereum Remains Strong, Why ETH Could Rally Above $2.3K

Ethereum is trading in a positive zone above the $2,150 support zone the 100 hourly SMA against the US Dollar. ETH price is likely to rally if there is a clear break above $2,300. Ethereum is trading in a positive zone above the $2,100 and $2,150 support levels. The price is now trading above $2,100 and the 100 hourly simple moving average. There is a key bullish trend line forming with support near $2,140 on the hourly chart of ETH/USD (data feed via Kraken). The pair start a fresh rally above $2,300 as long as it is above the $2,000 support zone. Ethereum Price Is Showing Positive Signs After forming a base above $2,000, ethereum started a steady increase . ETH broke the $2,200 resistance zone and it settled nicely above the 100 hourly simple moving average. The price even spiked above the $2,250 resistance level. However, the price seems to be struggling to gain pace above $2,250, similar to bitcoin . A high is formed near $2,285 and ether is now correcting lower. There was...

DeFi isn’t dead, it just needs to fix these 3 critical problems

It’s been a rough year for DeFi, and it may not get any better until projects focus more on security, regulation and usability. The persistent challenges decentralized finance face have been well documented by a handful of analysts and the recent collapse of the Terra ecosystem re-enforced the fact that something is critically wrong with DeFi. I think DeFi today is completely broken for 99% of the population. The promise of a more transparent financial system has been overtaken by greed. UST/LUNA is just the latest in a string of bad developments: — Peter Yang (@petergyang) May 11, 2022 Let's take a look at what experts say DeFi needs to do in order to have another revival. Improved usability To date, the promise of open and uncensored access to a global decentralized financial system has been largely hampered by the complicated interface, confusing multi-step staking processes and lack of clarity surrounding the yields on various tokens. What do you thi...

ENS DAO delegates offer perspective on DAO governance and decentralized identity

AlphaWallet CEO and Spruce co-founder talk about their roles as contributors to the Ethereum Name Service following the project's recent airdrop. Earlier this month, the Ethereum Name Service, or ENS, formed a decentralized autonomous organization, or DAO, for the ENS community. Cointelegraph spoke to two ENS DAO delegates who applied for the opportunity to represent the community and stay involved in the decision making process: Victor Zhang, CEO of AlphaWallet, an open source Ethereum wallet, and Gregory Rocco, co-founder of Spruce, a decentralized ID and data toolkit for developers. Zhang spoke about his experience as an external contributor to ENS and an early supporter since 2018. Zhang initially sought to help ENS by offering Alpha Wallet as a user-friendly tool for resolving .eth names and cryptocurrency wallet addresses. Essentially, if a user inputs an .eth name in the AlphaWallet, it will show the wallet address, and vice versa using reverse resolution. Alpha...

Crypto Coin Search

Search This Blog