• Bitcoin has fluctuated wildly over the past two years as it fell from its highest price of $19,783 in 2017 to a low of $9261.54 at the time of writing.
• The volatile and speculative market slashed its price by more than half over the past three years.
• According to a report, there are approximately 20 million addresses that have passively invested in Bitcoin.

Bitcoin has fluctuated wildly over the past two years as it fell from its highest price of $19,783 in 2017 to a low of $9261.54 at the time of writing. The volatile and speculative market slashed its price by more than half over the past three years. The risk-return tradeoff magnifies with each dollar of investment in the digital asset. In other words, profits and losses aggravate during adverse situations. Furthermore, the risk-averse investor is holding up the investment for more than 4 years. According to a report, there are approximately 20 million addresses that have passively invested (Hodlers) in Bitcoin.

The above image shows the change in the HODL net position as the Bitcoin Halving date nears to May 2020. More investors entered the market with an expectation of huge profits with minimal risk.

Expansion of ‘Hodlers’ in the Bitcoin market

A shocking result elucidates that 64% of the bitcoin supply has not moved. The figure translates to $11.58 million of stagnant bitcoin since 2018. The numbers are striking because major highs and lows were breached by the coin in 2019. The trend noted here is largely due to its limited supply and the absence of a central authority. Also termed as ‘hard money’, the huge investments related to cryptocurrency mining has led to an increase of passive investment in digital assets.    

Another reason for the unnerving attitude of HODlers is due to the Bitcoin halving that took place in May this year. As the name suggests, the rewards received per bitcoin mined is now halved to 6.25 BTC. It has a direct effect on the price leading to a bullish trend that drives up prices. Hence, HODlers feel that they should hold their investment for a longer period for better returns.

HODling is one of the best strategies so far

Various reasons are attributed to holding on to the digital currency for more than one year. The absence of fees for both lenders and borrowers has played a pivotal role in the increase of passive income. Major cryptocurrency exchange platforms saw a rise in customer signups before bitcoin halving. The strategy itself is cautioning investors of a speculative market. The acronym HODL stands for ‘Hold On for Dear Life’ suggests that markets are volatile.      

Piyasi Mitra