Is Bitcoin a Speculative Asset
IntoTheBlock provides on-chain analysis of prominent crypto news, utilizing blockchain’s transparency. Machine learning algorithms extract key data, offering a comprehensive exploration of industry developments.
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Two On-chain Indicators That Show How Bitcoin Is Mostly Not Used as an Speculative Asset
Critics contend that Bitcoin’s appeal rests solely on speculation, overshadowing its intrinsic properties. Assessing the degree of speculative activity is crucial in understanding Bitcoin’s ascent.
When a coin exhibits numerous speculative patterns, it suggests that a significant portion of its circulating supply undergoes constant buying and selling. On-chain data analysis allows us to observe whether Bitcoin holders demonstrate such behavior.
The initial indicator presented is Ownership by Time Held, categorizing investors based on the duration they’ve held their coins into three groups.
As of October 27 using IntoTheBlock’s Bitcoin ownership indicators
Classified as Hodlers are individuals holding Bitcoin for over a year, typically constituting around 60% of the circulating supply—a percentage that has remained relatively stable. With over half the supply in the hands of long-term investors, it indicates a predominant perception of Bitcoin as a sustained investment. The second category, Cruisers, consists of those moving coins in the last 1 to 12 months. The notable increase in this group over the past year serves as an indicator of new investors acquiring and holding Bitcoin. The final category, Traders, represents a more active use of Bitcoins, acting as a speculation proxy. This group comprises a minority, approximately 8%, and has seen a slight decline in the past year.
In the following chart, the volume of transaction activity is depicted over time, color-coded from blue to red based on the recency of the last coin transfer. The recent expansion of the yellow bands indicates a rise in the number of coins entering the market within the past 6 to 12 months, constituting 20% of circulating Bitcoin. Conversely, the growing blue band represents transactions from several years ago, showcasing a steady increase and suggesting that Bitcoin is progressively transitioning from a transacted asset to one primarily held as an investment over time.
As of October 27 using IntoTheBlock’s Bitcoin network indicators
