Bitcoin On-Chain Analysis based on HODL Waves Chart

What is HODL/Hodling?

HODL Waves is a very technical, interesting, and useful metric that tells us about the ongoing long-term as well as short-term trends for Bitcoin and other cryptocurrencies. It is a chart that presents the amount of Bitcoin in circulation using blockchain data.  Holding is a trading strategy in which investors buy and hold their Bitcoin for more than 6 months.

If we see the present market condition, we find that the number of holders has decreased. Only the whales are holding right now who are optimistic that the market will surely rise. This long bearish trend is the result of holders selling their assets. If the hodlers had kept their assets in their wallets, the situation would’ve been much different today.

Understanding HODL Waves

The data used in the HODL Waves analysis is directly taken from wallets (for how much time a wallet holds the Bitcoin). The data that is studied is divided according to various durations such as 1-3 months, 3-6 months, 6 months to 1 year, etc. It is shown in different colours to make it easier for the readers. The colour depends on the age of the coins. Aged coins are shown in cool colours while young coins are shown in hot colours (usually red).

During a bear market, the waves go up while in a bullish market the waves come down. But it is not applicable in the case of short-term analysis as it can go the opposite way. In the short-term scenario, the waves show a spike during the bullish trend.

Bitcoin Current Market Analysis

Bitcoin had touched the bottom when it went in the 14k bracket. As of today, the price is $20,896. It slightly tumbled below the 20k mark but soon recovered. It is a common perception in the crypto market that all altcoins follow the footsteps of Bitcoin but this week we saw a different story. Ethereum provided critical support to Bitcoin to sustain its 20k+ value. The news of the Ethereum merge elevated its market price up to 12 percent and at the same time, Bitcoin recovered as well.

In the previous week, Bitcoin traded at $22k but this week it once again dived as it has become a common thing in the past 7 months. As the price has seen 33% increase since it touched the bottom, experts believe that the hard time has passed.