The behavior of short-term Bitcoin holders is a critical parameter closely monitored by many participants in the BTC market.
According to an analyst from CryptoQuant, the Realized Cap Hold Wave metric, which observes the percentage of realized market value held by short-term Bitcoin holders, effectively shows the distribution and allocation of wealth and assets in the crypto market.
Realized market value, often called “realized cap”, is a variation of normal market value. It values each unit of a cryptocurrency (like UTXO – Unspent Transaction Output in Bitcoin) based on its price when it was last moved, as opposed to its current value.
For example, if a coin was last moved when its price was $1000 and has not been moved since then, that coin would still be valued at $1000 in the realized market cap calculation, even if the current price is $2000.
According to analysts, price bottoms typically occur in Bitcoin when short-term wallets sell a significant portion of their holdings in response to bearish market pressures. This leads to a significant increase in realized market value among long-term loyal wallets. The opposite situation is observed at price peaks.
During the 2015 bull cycle, there was an approximately 11% increase in realized market value held by short-term Bitcoin wallets in the first nine months of the cycle. This rate fell to 8.6% in the 2018-2019 cycle and currently stands at just 6% in 2023.
According to the CryptoQuant analyst, the 2023 price cycle shows that only a small portion of Bitcoins purchased by short-term holders are held until the long term, while at the same time the level of confidence and hope among new investors to buy and hold Bitcoins has decreased significantly.
*This is not investment advice.
