On-chain analytics provider Glassnode has taken a look at hodl patterns in its weekly report on Monday. Those patterns appear to be bullish as there has been a structural downtrend in younger coins being sold which indicates more hodling and dormancy.
The research noted that supply dynamics and coin maturity provides a fairly robust signal in either direction.
This week, we assess this divergence for both chains, as well as analyse what appears to be a supply squeeze in the making.
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— glassnode (@glassnode) August 30, 2021
Constructive Hodl Waves
Glassnode reported that both Bitcoin and Ethereum hodl waves have been in a clear downtrend for the past 4 months. Coins younger than 3 months are likely to be spent during volatility, it added. Falling hodl waves for these young coins indicates that the market prefers to hold the assets rather than spend them.
“Young BTC now represent only 15% of the coin supply and a very strong downtrend is in play.”
The Ethereum chart is very similar, with young ETH representing just 12.5% of the circulating supply.
Glassnode observed that more mature coins (3 months to 1 year) are statistically less likely to be spent, adding “a climbing proportion of them suggests increasing illiquid supply.”
“A powerful uptrend in coin maturation is in play for Bitcoin with almost 50% of the coin supply aged between 3m and 3y.”
The analytics supplemented these findings with something called the “liveliness metric.” This analyses whether more coin days are accumulated (HODLing) or destroyed (spending) by the total coin supply.
This metric has been down-trending since June, which suggests less spending and more coin dormancy. A similar pattern has played out for Ethereum.
Non-zero Bitcoin Balances
Another bullish metric is the number of non-zero Bitcoin addresses, which continues to increase. There are currently more than 38 million Bitcoin addresses with a balance, which is close to the all-time high in May.
The same has occurred for Ethereum, which has made a new all-time high of 60.7 million addresses with a non-zero balance. Glassnode made the conclusion that things are still bullish from an on-chain supply perspective.
“Supply dynamics seem to suggest an extremely robust underlying demand is present, and this should continue to be quite constructive for prices if the trend continues.”