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Daily Bitcoin On-Chain Snap #20

Exclusive Research

Realised HODL Ratio signals further room to the upside

The Realised HODL Ratio is a market indicator developed by Philip Swift that uses a ratio of the Realised Cap of HODL Waves. In particular, the ratio takes the ratio between the 1 week and the 1-2 years Realised capitalisation of HODL bands, and accounts for increased supply by weighting the ratio by the total market age. A high ratio is an indication of an overheated market and can be used to time cycle tops. As such, the current market cycle shows a rising Realised HODL ratio, but is still suppressed on a relative basis to previous ATHs in 2017,2014 and 2011.

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Expect bouts of downside volatility once Short-Term Holders reach 50% unrealized gains

The Short-Term Holder MVRV metric takes into account only unspent transactions younger than 155 days and serves as an indicator to assess the behaviour of short-term investors. Notably, Short-Term Holders broke-even on their cost basis as an aggregate, reaching profitability (MRV>1) during the first week of October. We noted, and Glassnode later confirmed, that STH hold roughly 20% of BTC supply. Significant downside volatility is expected at STH MVRV of 1.5 level or above, as these levels are difficult to sustain given the profitability of short-term holders. For context, the previous bull run in 2017 reached a STH MVRV of 2 for two weeks before a 70% pullback. Currently, the metric is at 1.30.

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