Bitcoin’s sideways movement appears to be pushing the asset’s price in a bearish direction again. After closing last week’s session above $ 34,750, BTC’s pricing structure is again under threat from a serious bear attack at the time of writing. The asset couldn’t hold above $ 34,000 and fell to $ 32,651, down ~ 3% over the past 24 hours.

BTC price 4-hour chart | Source: Tradingview

While such price actions continue to affect BTC’s ability to recover in the short term, there is another important indicator that could enable traders to understand sentiment from an investment perspective.

Bitcoin HODL Wave: Mature Market Amid Selling Pressure?

While price is struggling to maintain its position higher on the chart, data from Glassnode seems to suggest that the distribution in this bull market is much more mature than it was in 2017.

Real cap HODL wave (1 year – 7 years coin) | Source: Glassnode

Analyzing the entire distribution cycle from 2017 to 2021, coins held from 1 year to 7 years have a 4.9 times higher net capitalization, i.e. 11.3% compared to 2.2% for 2017. This shows that the strength of long-term owners is great, which aggravate scarcity.

When analyzing “middle-aged” coins held between 3 months and 12 months, they currently have the greatest volume and, according to data, tend to become sales pressure.

Real Cap HODL Wave (coin <1 month) | Source: Glassnode

After all, coins are generally distributed under 3 months and constantly change hands among new buyers. Their distribution tends to shift towards long-term accumulation.

Well, these HODL waves are extremely important in understanding market sentiment, but the metrics are often slower and when the hold change actually occurs the price on the chart is already falling or rising.

Why is this happening?

Real Cap HODL Wave (coin 3 months – 12 months) | Source: Glassnode

Simply put, it is an indicator that takes a long time to confirm. The HODL wave is quite important from a long-term perspective, but it won’t be helpful in understanding short-term upward or downward pressures. For example, when the price fell on May 19, the reaction of the “middle-aged” coins was not clearly visible because their holding period was insufficient.

Over the past few weeks the price has stabilized at the lows, and according to the attached chart, “middle-aged” coin holders are still optimistic. This means that panic sellers would have avoided selling at a possible loss when the market collapsed. However, the signal was not clear then and is different today.

In the short term, it is even more important to track price movement based on supply and demand and can examine the location of liquidity pools to determine the range. When it comes to HODL sentiment, it makes you even more optimistic when you look at a long-term investment position.

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