2022 was a difficult year for bitcoin, but the alpha crypto made a nice comeback in early 2023. Admittedly, the market is facing uncertainty, but analysts are talking about a possible bull cycle very soon. In this context, are HODLers ready to support the bull run?
The current analysis was prepared in collaboration with the Bitget crypto exchange platform. Present in more than 100 countries, Bitget is a cryptocurrency exchange created in 2018. With a user base of more than 8 million, the digital asset platform offers a variety of services to its customers. These include derivatives trading, spot trading, social trading and copy trading. Thanks to its innovative products, bitget seduces both amateurs and professionals.
Understanding HODLers
HODL (Hold On for Dear Life, literally translated as not selling, as if your life depended on it), refers to a cryptocurrency investment strategy. The method is simply to hold onto your assets regardless of the short-term market movement. HODLers are simply bitcoin holders who follow this strategy.
HODLers are primarily driven by two things. First, they believe in their assets. Secondly, they are convinced that holding the assets long enough would allow them to make more profits compared to day trading. True, but will they be able to resist the urge to sell in the current market conditions, now that bitcoin has made a nice comeback from its hibernation?
In any case, the Reserve Risk indicator suggests an increase in the incentive to sell. The Reserve Risk is a cyclical market indicator. The analysis visualizes the confidence of long-term bitcoin holders in the price of the crypto at any given time. Specifically, the indicator compares the incentive to sell and the resistance of HODLers to liquidate.
HODLer: what behavior when faced with the bull run?
The price of bitcoin (BTC) has gained more than 40% since the start of the year. But the rally appears to have stalled in early February. Which brings up this question: Is bitcoin’s bull run in jeopardy despite bullish sentiment from long-term holders? Analysts are indeed fearing a drop unless bullish sentiment from BTC holders pushes the price of the cryptocurrency higher.
Bitcoin’s Reserve Risk recently fell to its lowest level ever. In a report, Bitfinex analysts explain that the indicator trades at low levels when there is a high build-up of investors and HODLing is the most widely used market strategy. The lower the ratio, the higher the conviction of investors.
As the price increases, the incentive to sell and make a profit also increases. Generally speaking, HODLers spend their coins along with the progress of the bull market. However, stronger hands will resist the temptation to sell.
Despite a current market pullback, confidence in the continuation of the bitcoin bull market is quite high. The change in position, although still negative, is quite negligible. This means that a significant number of HODLers continue to support the coin. This increases the likelihood of a short-term recovery.
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