Almost 80% of Bitcoin Is Sitting Still

According to K33 Research, the share of Bitcoin held by long-term holders has reached an all-time high.

Some traders read this as a sign that the accumulation phase is winding down. There is a well-known hypothesis in trading that price action ultimately reflects the needs of long-term holders:

• they accumulate Bitcoin when the price falls, which is known as the accumulation phase;
• once they have absorbed everything short-term holders are willing to sell at low prices and sellers dry up, the price starts to rise;
• the rally, in turn, reflects the long-term holders' need to take profits by selling Bitcoin back to short-term holders, which is known as the distribution phase;
• finally, once buyers at elevated prices run out, the price drops, and the cycle begins again.

Right now, long-term holders control more Bitcoin than at any point in history: 78.9% of all coins in circulation.

Looking at that number, I find myself thinking less about market cycles and more about what it tells us about how Bitcoin is actually being used.

• Is it fair to say that nearly 80% of all Bitcoin simply is not being used for long periods of time - that it is just sitting dormant at the same addresses, dead weight?
• Or is holding Bitcoin exactly what using Bitcoin means?

The first interpretation would suggest that Bitcoin has failed as a project: even its own holders do not use it.

The second suggests the opposite - that the vast majority of Bitcoin holders have a clear-eyed understanding of what Bitcoin does best, and where it has no real competition.