Why the HODL mentality of Bitcoin investors means a price surge
If you were traveling a bit in the crypto sphere, you naturally heard the term “HODL” in connection with “Bitcoin”. Hodl is originally a misspelling of the word “hold” – an industry joke, a meme used by crypto investors who believe Bitcoin prices will rise over time. Especially due to increased distribution and Bitcoin's disinflationary inflation plan, which “halves” every four years.
While some view HODL as a simple meme, data show that investors take HODL seriously – and that could mean that prices are on the horizon.
HODLers hold on to BTC before halving
According to Rafael Schultze-Kraft, co-founder of the crypto analysis company Glassnode, on-chain data show that “the HODLers have been diligently keeping the upcoming halving in the past months”. Historically, this means that we are still far from the end of the ongoing bull market, which is currently in a reconstruction phase.
The Schultze-Kraft observation coincides with a similar observation by Alistair Milne from the Altana Digital Currency Fund. He points out that, according to the on-chain analysis, almost 70% of the 18, 12 million BTC in circulation “have not been moved for over 6 months”
According to Flipside researcher Eric Stone, the fact that such a large amount of Bitcoin is “dormant” implies that a “dramatic shift” is imminent in the crypto industry and the market.
What does this mean for Bitcoin prices?
This raises the question: What does Bitcoin investors' tendency to HODLn before halving in May 2020 mean for the cryptocurrency market?
Well: It implies that BTC is about to start the next bull run, analysts say.
Melik Manukyan, a prominent commentator and Bitcoin engineer, writes on Twitter that the shortage of the leading cryptocurrency – only reinforced by the existing HODL investment strategy – should lead to a dramatic price increase with a delay of several months after the halving.
According to the engineer, halving has a major impact on the supply-demand economy of the BTC market. Ultimately, this should lead to rising prices in the market.
This claim has been confirmed by Alistair Milne. The commented that after the halving came into effect this year 50% of all newly mined bitcoins will be absorbed by the purchase of customers from two companies Grayscale through its Bitcoin Trust and Square through its BTC shopping service.
This, in turn, is in line with Manukyan’s impression that the halving will drive prices higher due to stagnant / rising demand combined with a decline in incoming supply.
As far as the exact price targets are concerned, previous halving was the forerunner for rallies of over 1. 00 0% – and that makes some believe that something similar could happen again in the upcoming cryptocurrency market cycle.
Proof of text: newsbtc