New data shows that current Bitcoin (BTC) price movement is showing higher levels of “HODLing” activity compared to previous bullish cycles.
According to network analyst Willie Wu, an indicator called “reflectivity” has increased in recent months. Wu explained that the index measures the tendency of investors to Bitcoin to hold onto BTC as the price rises. This is really an alternative way to measure the HODLing activity of retail investors.
An increase in the Bitcoin market value against the invested dollar or return. Source: Willie Wu
This next uptrend may overwhelm the previous session
There are many reasons why retail investors are sticking to BTC more than in previous bullish cycles.
If Bitcoin unites in 2021, most investors will see bullfights in it after it is cut in half. Historically, BTC has accumulated 12-15 months after each half, and each time it reaches a new all-time high. Based on the tendency of BTC to build up after cutting it in half, retail investors can pursue a strategy to avoid price drops if a strong and sustainable rally begins.
Bitcoin has also shown an amazing level of flexibility thanks to several potential Black Swan events. After the initial recovery from the disaster caused by the pandemic in March, it remained above $ 10,000 despite many negative events.
Recently, the price of Bitcoin plummeted after the US Commodity Futures and Trading Commission (CFTC) accused BitMEX of violating a banking secrecy law.
After the CFTC announcement, BTC fell below $ 10,500 but quickly returned to the support level of $ 10,700. According to Lu, this may be due to the convergence of two major factors. Wu explained:
“This [reflexivity] is a tendency for HODLers to keep currencies stronger as prices rise. I was expecting an increase in reflectivity in the bull market statement, but it looks pretty consistent from the past two cycles … This cycle is interesting; the reflectivity increases instead of static compared to the cycles While we now need more invested capital to get the same percentage rise in prices, the effect of HODLers holding coins is diminishing – “the number goes up” for every dollar invested.
By the fourth quarter, industry leaders believe the US presidential election could benefit Bitcoin, and positive HODLing data could weaken the price of BTC.
The US presidential election and the fourth quarter of the year may raise the bitcoin price
Industry leaders and prominent investors in the cryptocurrency industry are looking forward to the upcoming presidential election for Bitcoin in November.
Su Zhu, CEO of Three Arrows Capital, said the Democratic Sweep will accelerate Bitcoin due to various macroeconomic factors. He also indicated that Trump’s second term may also be in favor of Bitcoin. he wrote:
“The proposal is very optimistic for BTC because democratic blue waves could open a unique setting for the MMT program with similar weakness and dollar deficit. However, Trump is also optimistic.”
As Cointelegraph reported earlier this week, traders including Peter Brandt believe that the charts with higher timeframes are indicating a strong trend for Bitcoin. The combination of favorable technical conditions, strengthening of baseline conditions, and increased HODLing activity could halt the growth of BTC in 2021.