New research by Delphi Digital shows that the majority of Bitcoins have not moved in over a year, and reiterates the finding that a huge portion of BTC is lost.
0/ Using UTXO age dynamics across market cycles, we attempt to time a price bottom for #Bitcoin by understanding when selling pressure from long term holders will wane. Our analysis suggests a likely bottom for $BTC in Q1’19 (see report for detail)https://t.co/YSUA4rIt7a— Delphi Digital (@Delphi_Digital) January 10, 2019
The research utilized Bitcoin’s Unspent Transaction Output (UTXO), which is a baked in metric in BTC which shows the last time a Bitcoin was used in a transaction. Delphi took this data and examined when Bitcoins were and weren’t moved or spent against price trends. Broadly, the research found that the +1 year UTXO line (the amount of BTC which hasn’t been touched in over a year) declined in 2017 while the price of Bitcoin increased- when traders were incentivized to sell their Bitcoin.
Since that time, as prices have generally fallen, this metric has risen, indicating that people are saving up their Bitcoin in hopes of an eventual market turnaround. As Delphi shows, more than half of all Bitcoins have been saved for at least a year, which corresponds to the current market downturn.
The research also looked at the 5+ year UTXO line, which has been rising since 2014. This number likely indicates the portion of traders who are holding long term, or who have lost their Bitcoin. There is good reason to believe that almost all of the Bitcoin that has been held for five years or more is lost, which is currently 20%, though other research has claimed that figure to be as high as 36%
Read more: Will Bitcoin replace fiat money?
While clearly holding Bitcoin through a market downturn in order to wait for a chance to sell it profitably is the most logical move for a trader, this in effect decreases the actual value of Bitcoin, given that it is not being used as a currency. Bitcoin may be an effective speculative tool, but it is still volatile, and has no intrinsic value if it isn’t used for buying and selling goods. While Bitcoin purists will go to bat for the cryptocurrency as revolutionary, even they must agree that if it isn’t being used in the way it was intended, it is only valuable in theory.