What is the Bitcoin Realized HODL Ratio?
The Bitcoin Realized HODL Ratio analyzes the behavior of Bitcoin holders, helping to understand market cycles and potential turning points for Bitcoin's price.
The Bitcoin Realized HODL Ratio analyzes the behavior of Bitcoin holders, helping to understand market cycles and potential turning points for Bitcoin's price.
The Realized HODL Ratio compares the behavior of newer, possibly less committed investors (short-term holders) against that of more committed, possibly more experienced investors (long-term holders).
Realized Cap refers to the total value of all bitcoins at the price they were last moved, instead of the current market price. This can give a more realistic picture of how the whole market values their bitcoins.
This ratio divides the realized cap of bitcoins that have moved recently (short-term holders) by the realized cap of bitcoins that haven't moved in a long time (long-term holders).
High values of the ratio may suggest that new or short-term investors are dominating the market, which might occur near market tops where more speculative trading happens.
Low values might suggest dominance by long-term holders, typical near market bottoms, indicating a strong base of investors who are not selling even if prices fall.
Scenario 1
Bitcoin’s price has been rising rapidly. Many new investors have started buying Bitcoin, hoping to make quick profits. These investors are likely to sell their Bitcoin soon if they see profits or if the market starts to drop.
Here, the Realized HODL Ratio would be high, reflecting a large share of the market value held by these short-term holders.
Scenario 2
After a big price drop, many speculative investors have sold their Bitcoin, leaving mostly those who intend to hold for the long term, believing in the future rise of Bitcoin. These holders haven’t moved their Bitcoin for a long time.
Here, the Realized HODL Ratio would be low, showing that the market value is dominated by long-term holders.
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