November 4, 2022
Greg Cipolaro

Research Weekly - Holders Keep on Holding


  • Blockchain data shows us that more bitcoins are being held for longer
  • Some observations about Bitcoin’s earliest days as the white paper turns 14 years old
  • Macro is still front and center as evidenced by the price reaction to the FOMC meeting this week

More Bitcoins Are Being Held for Longer

The percentage of bitcoins that have been held for more than a year has reached an all-time high. It appears that the “crypto winter”, which is approaching a year in length, has not shaken the resolve of long-term holders. The metric, which measures the length of time since the coins last moved, shows that at the end of October, two-thirds of the 19.2M bitcoins in existence have not moved for a year or more. That equates to about $260B of wealth invested in bitcoin for what we classify as the long term.

There is both cyclical and secular information to glean from the preceding chart. On the cyclical side, the percentage of coins held for over a year tends to rise as prices bottom. Given the rise in long-term ownership, perhaps this is another sign of a cyclical price bottom. On the secular side, the trend is for more of the bitcoins in circulation to be locked away for longer. This tells us that investors are increasingly treating bitcoin as a long-term investment, something we advocated for in our report “The Adverse Impact of Market Timing.” Based on the data, it seems as if investors have also agreed that "time in the market" is much more favorable than "timing the market."

The Bitcoin White Paper Turns 14

On Monday, October 31, the Bitcoin white paper turned 14 years old. The document heralded a new era for money, one that did not derive its value from governmental edict but rather from technological proficiency and ingenuity. The advent of Bitcoin ushered in a completely new asset class as well, one that still perplexes many investors and regulators today. One of the reasons is that Bitcoin requires us to confront simple yet uncomfortable questions. What is money? What gives something value? What traits give rise to the best money?

While it is easy to appreciate the significance of the white paper in hindsight, few at the time appreciated Bitcoin for its genius. Reviewing the thread of the email to the Cryptography Mailing List, which can be found here, we would classify the responses as tepid at best. Only Hal Finney seemed to support the idea from the get-go, starting off his opinion of the announcement with, “Bitcoin seems to be a very promising idea.” Other responders to the initial announcement, James A. Donald, John Levine, Ray Dillinger, and Nicolas Williams, appear to be skeptical or even downright dismissive. That probably was a reasonable reaction at the time, given that all prior attempts at creating a cryptocurrency had failed after launch, such as DigiCash, or only existed on paper, such as Bit Gold or b-money.

Fourteen years later, the Bitcoin white paper is still hosted at the same location that Satoshi Nakamoto used in 2008. While some aspects of the paper have been updated or clarified in the coding of the technology, the basic concepts and structure still hold, remarkable for a technology that is on the cusp of the 24th major release with Bitcoin Core v24.0. For those looking to read the Bitcoin white paper for the first time or review it, it can be found here. For those looking to gain a greater understanding of the development of Bitcoin, our “Developers of Bitcoin” report details the early days of Bitcoin building and what it looks like today.

The Fed Has Made Macro Watchers of Us All

At 2 PM Wednesday, the Federal Open Market Committee (FOMC) raised the target on the Fed Funds rate by 0.75%. While the move was widely expected by the market, the course of future rate decisions was still up for debate. During the press conference, Chairman Powell left the door open for a decreased pace of rate increases while also acknowledging that it may be premature to pause hikes. Markets, including bitcoin, initially reacted favorably to the news but then traded lower on the realization that this was not the dovish pivot many had hoped. While correlations with bitcoin and stocks are off their highs, on a day like Wednesday, bitcoin appears to be trading in lockstep with other major asset classes on an intra-day basis.

We point this out to show how dominant the Fed and monetary policy is with financial markets these days, including bitcoin. While monetary policy has always been a factor affecting investment returns, since the onset of the COVID-19 healthcare crisis it often seems to be the only factor affecting investment returns. Prior to March 2020, it was rare for an analysis of bitcoin to include such a detailed understanding of the nuances of monetary policy. Today, that appears to be the norm. Perhaps this is a sign of maturity for the asset, as the investor base has transitioned from one that was primarily retail and less focused on macroeconomic events, to one that is institutional in nature, and thus more attuned to the economic and political events. While the current macroeconomic moment has made Fed watchers of us all, we know this moment will pass. The reality is that too few macroeconomic factors adequately describe bitcoin’s price movements and therefore idiosyncratic factors unique to bitcoin are more likely to affect future price direction.

Market Update

Asset prices were down across the board this week largely as a result of the interest implications of the Fed's monetary policy outlook, which despite some dovish rhetoric, is still firmly tilted towards a hawkish stance. Bitcoin fell 1.8% on the week, but it is still firmly above the $19K level it had traded about for several months. Equities fell as well, with the S&P 500 down 2.3% and the Nasdaq Composite down 4.2% on the week. Bonds also fell across the board amidst the higher forward rate expectations.  Investment Grade Corporate Bonds were down 0.5%, High Yield Corporate Bonds were down 1.8%, and Long-Term Treasuries were down 1.4%.  Oil fell 1.0% and gold fell 1.9% as real rates rose and forward inflation expectations fell slightly.

Important News This Week


Argo Blockchain Announces Strategy/Company/Ops Update - Argo

CleanSpark Expands Mining Fleet with Purchase New Machines - CleanSpark

Stronghold Digital Mining Announces Extinguishment of Debt - Stronghold

Financing and Bitmain Prepayment Update - Iris Energy


Derivatives Exchange Deribit is Hacked for $28M - Twitter

Another Bug Briefly Took Down Part of the Lightning Network - Bitcoin Magazine


MoneyGram Introduces New Service Enabling Customers to Buy, Sell and Hold Cryptocurrency - MoneyGram

FIS Subsidiary Worldpay to Enable USDC Settlements on Polygon - Coindesk

Goldman Sachs Unveils Crypto Classification System, Aimed at Institutional Investors - CNBC

JPMorgan Had Its First Live Trade on Public Blockchain Polygon - Bloomberg

Bakkt to Acquire Apex Crypto - Bakkt

Regulation and Taxation:

‘Hundreds’ of Crypto Cases Coming, IRS Criminal Chief Says - Bloomberg

Tether Bank-Fraud Probe Gets Fresh Look by Justice Department - Bloomberg

Coinbase Files Amicus Brief in Ripple Case - Coinbase

New Rules for a New Thing: A Petition for CFTC Rulemaking on DAO Participant Liability - Haun Ventures

Upcoming Events

Nov 10th – Consumer Price Index

Nov 25th – CME futures expiration

Dec 14th – FOMC interest rate decision

Thanks for joining us again this week. Please reach out with any questions or comments.

The NYDIG Team

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