Bitcoin “Reserve Risk” Metric Approaches All-Time Lows


Data shows that the Bitcoin “reserve risk” index has recently fallen and is now reaching all-time lows only seen in 2015 and the COVID crash in March 2020.

Bitcoin Reserve Risk Suggests that Price-related HODLing is Strong

According to the latest weekly report from glassBTC investors have been holding on tight to their currencies despite the significant drop in the cryptocurrency’s price recently.

Before looking at what the “reserve risk” indicator does, it is best to understand two concepts first.

A “coin day” is accumulated in the market for every 1 BTC that remains fixed for one day. The sum of these currency days in the entire market can tell us how idle long-term pregnant The show was.

For this reason, the sum of coin days can be an effective way to gauge the conviction of scammers in the bitcoin market.

However, there is another way to interpret currency days, hence the LTH conviction; As Glassnode explains:

Stronger hands will resist the temptation to sell and this teamwork builds “opportunity cost”. Each day HODLers actively decide not to sell increases the cumulative unspent “opportunity cost” (called a HODL bank).

The other idea of ​​interest here is the incentive these LTHs have to sell right now. It is measured by the current price of bitcoin.

When the price goes up, traders are increasingly inclined to make their profits, so the incentive to sell goes up.

Related reading | First in History: Bitcoin Mayer Multiple Records Less Value than Last Cycle Low

Now, reserve risk forms the ratio between this “incentive to sell” and the cumulative “opportunity cost” (explained above) for long-term traders. Below is the indicator chart.

Bitcoin Reserve Risks

The value of the indicator seems to have sharply declined recently | Source: Glassnde's The Week Onchain - Week 26, 2022

As you can see in the chart above, the Bitcoin reserve risk has declined in recent days and is now approaching all-time lows.

This indicates that despite the coin’s decline during 2022, BTC investors are still holding onto their coins firmly.

Related reading | Bitcoin Monthly Marks Down Bollinger Band, Tool Creator Hints Down

The last time such lower values ​​of the scale were observed was in late 2015 in the bear market and March 2020 crash.

BTC price

At the time of writing this report, Bitcoin price It is floating around $20.9K, down 1% in the last week. Over the past month, the coin has lost 27% of its value.

The chart below shows the trend in the value of the cryptocurrency over the past five days.

Bitcoin price chart

Looks like the price of BTC has been consolidating sideways recently | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, Glassnode.com



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