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Blockchain investigators used an accurate method to analyze Bitcoin BTC activities to determine at what point long-term holders typically produce and sell their Bitcoin.
Delphi Digital, an independent research boutique specializing in the digital goods market, has studied Bitcoin transaction data and market prices, calculating that Bitcoin investors are (for the most part) made with their sale.
This indicates the start of an accumulation phase that could replicate cycles back in 2014, when the price fell from $ 1,000 to less than $ 200 as a result of a one-year bear market.
"In its simplest form, it's a method for understanding the accumulation and sale of long-term cardholder models through market cycles," a spokesman at Hard Fork said. "We have established that the sales pressure of long-term holders has been exploited significantly and that the accumulation has begun".
Calculation of the fund with Bitcoin UTXO
The Delphi Digital method is based on data contained in Bitcoin transactions, known as Undent Transaction Output (UTXO).
Every time Bitcoins are sent, the network creates a new UTXO. The age of that UTXO indicates which block was added to the particular transaction, which is the last time Bitcoin has been moved.
Basically, analysts are monitoring the last time the coins have moved. A cumulative UTXO age decline coincides with an increase in Bitcoin activity, which means less overall hold.
On the contrary, investors usually accumulate while the price decreases. A cumulative UTXO age increase represents a greater hold on the market.
We may have already exceeded the capitulation peak
Here is an example of the Delphi Digital chart creation method. The black wavy line shows the price of Bitcoin, while the wavy colored lines represent the UTXO age of Bitcoins.
Thus, the green line indicates what percentage of Bitcoin's current offering (currently 17.5M) has not been used in a transaction in the last year.
The blue line shows us how many Bitcoins have not moved in the last five years or more.
Note that the green line was quite volatile. The most recent data indicate that just over 50% of Bitcoin's circulating supply was not used in the last year.
But check that blue line. It has been growing for more or less since 2014 (the first year Bitcoin could have a UTXO age of over five years).
The exception is a small decline at the end of 2017. Note that the dip occurs when the price of Bitcoin is at its maximum (indicated by the purple vertical line).
The idea is to apply this type of analysis to the most recent price decline. If we can understand where sales pressure comes from by looking at the age of UTXO, it is easier to approximate how close we are to "selling out".
"[We] It can be assumed that these old owners have exhausted most of their sales efforts, highlighting the flattening of these old UTXO bands, along with the 1-year UTXO band that reaches a floor and remains flat during the first half of 2018 " analysts wrote: "We are witnessing an accumulation process now similar to the one at the end of 2014. This would imply a fund in sight".
20% of Bitcoin's current supply could be lost forever
How bitcoins that have not moved in five years or more represent such a large percentage of the circulating offer, the understanding why they have not moved is fundamental.
According to Delphi Digital, about 20% of Bitcoins are probably stuck forever. This is inevitably due to the fact that their owners lose the required private keys for access.
"Chainalysis has completed an in-depth analysis of the probable loss [Bitcoins] and it came to an estimate that ranged from 2.78 to 3.78 million coins, "said a spokesman at Hard Fork." We were able to indirectly monitor those coins over time as they aged and moved into older groups. . Most of those coins are now in the 5-year band. This implies that there are very few coins that have not been moved [five] years in which the owners still have access to the private key. "
Delphi Digital also quickly pointed out that many of these Bitcoins were lost a long time ago. Furthermore, it should be noted that Satoshi Nakamoto represents about 1 million inactive Bitcoins.
"This implies that a significant part of the coins in the 5 year + band is lost.The rest of the coins lost progressively will make their way among the bands in a similar way, ending up in the 5 year + band," the spokesperson added.
So with all this data and a method to determine where the sale comes from – at what point does Delphi Digital believe that the price of Bitcoin will shrink and stabilize?
Well, right now – their analysts say that the local Bitcoin price fund will occur at some point in the first quarter of 2019.
Here you can find the full description of the UTXO analysis. The full report has even more estimates, such as when the next bull run could reach its peak.
Published 10 January 2019 at 16:02 UTC
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