Bitcoin Inactivity a Positive Sign for CryptocurrenciesRyan Tucker
The percentage of bitcoins that haven’t moved in over a year is at its highest level in four years. And while at first glance that might seem to be a negative for Bitcoin, it actually isn’t. It’s an indicator that more and more Bitcoin investors are bullish about Bitcoin’s potential future price growth, and they’re holding on to their investments like never before.
With products like a cryptocurrency IRA, investors have even more choices than ever to invest in cryptocurrencies like Bitcoin. They can take advantage of the tax-advantaged status of a cryptocurrency IRA that is just like that of a conventional IRA, only that it invests in cryptocurrencies rather than in stocks and bonds. They can even fund their cryptocurrency IRA with rollovers from existing tax-advantaged retirement accounts such as a 401(k), 403(b), TSP, or IRA.
Over 60% of bitcoins haven’t moved in at least a year, which is an encouraging sign that investors expect future price growth. One might expect many investors to take advantage of the profits they’ve already made, but it appears that many just want to keep holding on. And while the percentage of bitcoins that have been inactive for at least a year could include some coins that are lost due to their holders losing their private keys, the overwhelming majority of these coins are those held by investors looking for price appreciation.
The only downside to these coins not moving is that it decreases the supply of Bitcoin available to those who want to use it as a currency. But if demand for Bitcoin as a currency increases, the price will get bid up, which will cause some of these hodlers to part with their holdings.
With Bitcoin being the 800-pound gorilla in the cryptocurrency world, what benefits Bitcoin benefits other cryptocurrencies as well. And as more investors look to hold on to Bitcoin to gain in the future, expect to see some of that same investor behavior extend to other cryptocurrencies as well.