As Bitcoin became an investing and wealth-producing phenomenon there were those who jumped in and out of the market to reap rewards (or experience losses). And there were those who stayed the course. Considering the steep swing in the crypto markets it has taken a deep faith in the staying power and eventual supremacy of Bitcoin to “Hold On for Dear Life” causing these folks to call themselves HODLers after a misspelling of HOLD posted in 2013. Now as a long term Bitcoin holder sells 10,000 BTC we are wondering if we are seeing a sea shift in this set of investors.
Is HODL Any Different Than Buy and Hold?
No and yes. HODL is crypto slang that refers to an investing strategy in the Bitcoin world. On the face of it the HODL approach of a dedicated Bitcoin investor is the same as Warren Buffett saying that his preferred time span for holding a stock is forever. In both cases the investor holds (or hodls) an asset that they believe will produce reward for years to come. However, when someone like Warren Buffett is investing in stocks or simply managing a portfolio, they routinely analyze intrinsic stock value. This means they are analyzing how the business plan of a company will generate forward-looking cash flow, a fundamental aspect of their investment. As we have somewhat tiresomely written again and again, the fundamental value of Bitcoin could be significantly lower than even its beaten down current price.
Sale of Ten-Year-Old Bitcoin
As noted by Coin Telegraph those who track the Bitcoin market are seeing BTC that have not seen the light of day for a decade or more come back on the market. According to their article 510.65 BTC surfaced for the first time since 2012. Bitcoin only reached $12.56 by the end of 2012 so these tokens were purchased for no more than $6,413.76. That stash was worth roughly $34,213,550 at the last peak of the Bitcoin market in November of 2022 and $9,828,991.20 at the beginning of October in 2022. Meanwhile a lot more BTC is still out of circulation for ten years or more, 2,521,378.89 BTC as of the end of September 2022. And in August of 2022, 10,000 BTC that had not seen the light of day for 9 years left its wallet and return to the blockchain.
Is There a Bitcoin Exodus in the Works or Not?
Why are some folks selling their old Bitcoin? Is it because they think the market is going down even more? That could be, but it is instructive to look at why holders of large numbers of shares of stocks sell. Retirees frequently invest in dividend stocks so that they have income after they are no longer getting a paycheck. Others stick with their growth stocks and simply sell a few shares from time to time when they need cash. The person who sold $9 million in BTC might still have a few thousand more BTC in reserve and could just be donating money to their favorite charity or holding cash as the Fed raises interest rates and the dollar strengthens. To us the exit of a few thousand BTC from wallets does not mean a sea change in Bitcoin sentiment when more than a couple of billion old BTC are still in hiding. This does not change our opinion that Bitcoin probably has more room to fall but it does not mean that folks dedicated to the HODL approach are bailing out just yet. In fact, it could just be that those 510 BTC that went live recently were involved in Bitcoin wash trading as long term BTC investors seek to prop up the market!
Long Term Bitcoin Holder Sells – SlideShare Version