A subset of bitcoin investors that always nailed the price peaks

It was an aha moment when I was visualizing Glassnode’s metrics related to supply of bitcoin. If you are already familiar with bitcoin UTXO’s you can jump to the revelatory charts and have your aha moment right away. If you want a little introduction, please follow along. I just want to go out on a limb and say that Glassnode folks have done a terrific job of categorizing metrics.

Each bitcoin (UTXO, to be more precise) that exist out in the open has a certain age attached to it. The age is calculated since the time when that UTXO has been moved, in other words once it has been transacted from an address to another. Once this movement or transaction happens, the UTXO that is now in the hands of the receiver will be considered again as a baby UTXO with age 0.

Now, if you are a short term investor in Bitcoin, you will probably never let any of the UTXO’s in your control reach the age of 1 year. On the other hand, if you are a religious believer in bitcoin, you will be called a HODLER by the way, your UTXO’s are probably locked in some cold wallet and are gathering dust. The summary of this article is that if you are some where in between these 2 groups, i.e. you are an investor with a horizon of 1 to 2 years, it seems like you have predicted bitcoin’s most memorable rallies quite amazingly.

As evidenced by Figure1, the quantity of bitcoins aged 1–2 years fluctuate between 1 and 5 million; the red curve. It has dips and swells. It’s quite intriguing that most of bitcoin important rallies happened in the dips of the red curve. The bitcoin rallies are identified by the spikes in the blue curve. This means when the holders of these UTXO’s abound price activity is quite steady. But when these UTXO’s are sold and become rare, something gets braced to happen. Further analysis could be done to find out what happens to them, whether they end up in exchanges, etc.

The point will be better made if I adjust the red curve by total supply. Here you go:

While Figure1 has the advantage of showing the subset of bitcoin supply in number of bitcoins which is its real term, Figure2 is showing the percentage of the supply of bitcoins between 1–2 years old to the total supply of bitcoin at every day.

Methodology and preparation:

python

with open('price.json') as f:
    d=json.load(f)
price= pd.json_normalize(d)
print(price.head(0))
price.t = price.t.apply(lambda x: dt.datetime.strptime(x, "%Y-%m-%dT%H:%M:%SZ").date())
price = price.groupby(['t']).mean().reset_index()
price['Price-Ma'] = price['o.c'].rolling(5).mean()

Tableau

Credit goes to Bitprobe