While Bitcoin has been on a roller coaster ride in recent weeks, some experts say its volatility is leveling off, noting retail investors are starting to re-enter the market and long-term investors are on the ‘HODL wave’. (More on what that means in a moment.)
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Interestingly, according to James Butterfill of Coinshares, Bitcoin exits cooled last week, totaling $ 10 million, “significantly less than the previous record week of $ 141 million,” according to a blog post. He adds that trading activity on Bitcoin investment products increased 43% from the previous week. Butterfill told GOBankingRates he attributes the decline in exits “to an early sign that we have seen a bearish spike and investor sentiment is starting to turn positive again.”
Blockchain data provider Glassnode says in a report that the high volatility of Bitcoin markets makes it a magnet for traders, who are able to monetize price movements in either direction. “New HODLers” are investors who buy the lower end of the current range and are likely to hold “regardless of volatility ahead,” according to the report.
“At the same time, Bitcoin’s powerful fundamental properties make it a desirable store of value asset for long-term investors. During a turbulent and consolidating market structure, we can gain insight into the balance of supply and demand, and the degree of accumulation by holders in the short and long term, by observing the Profitable supply changes during price fluctuations, ”according to the report.
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Also in the report? Snapshot of long-term traders, mainly people who bought crypto at the start of the bull market and are “HODLers who bought coins at the start of January 2021 and didn’t spend them”, suggesting that they do not panic by selling during this volatility and therefore are more likely to re-accumulate than to cash out.
Short-term traders and holders are investors who trade in price fluctuations “and are more likely to liquidate at price targets or in the event of downward volatility. They are also more likely to use derivatives and leverage, ”according to the report.
Butterfill added to GOBankingRates that “given the recent price rout that has rocked some investors, it may be a little while before we start testing all-time highs again. “
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Bitcoin was down 1% this morning, at around $ 39,000, according to CoinMarketCap. Crypto has risen 315% in the past year and 34% since the start of the year, according to data from MarketWatch.
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This story has been updated to include exclusive commentary from James Butterfill.
This article originally appeared on GOBankingRates.com: Bitcoin Constantly Crashes, But These Investors Won’t Sell – Why “HODLers” Buy Down and Hang On