According to a blockchain analysis firm called Glassnode, 93% of Bitcoin addresses are said to be “in the black”. That is to say that 93% of the addresses were generated when Bitcoin was worth less than it is today. With so many addresses being profitable, is now the right time to sell and is the price of Bitcoin and other digital assets about to collapse?
Counting Bitcoin Profits
The report from Glasssnode measures the balances of assets transferred into a wall and at an average price lower than the current price of Bitcoin. That makes sense, right?
The significance of this most recent report is that it marks an amount of Bitcoin addresses 29% higher than the same report taken just one month ago. When Bitcoin broached $11,400 USD, it marked an 11 month high as far as the number of addresses in the profit is concerned. The current bull run in the market, specifically as it relates to Bitcoin, is actually the result of investors purchasing Bitcoin at lower prices for an extended period of time.
This makes complete sense if you consider that over the last year less than 40% of Bitcoin addresses have seen coins move in and out. It seems more and more people are inclined to hold onto their Bitcoin for an extended period of time.
The Case for Selling Bitcoin Now
Selling Bitcoin now would be strictly a profit taking move for investors who’ve been fortunate enough to accumulate more as a result of the price of Bitcoin plummeting in March at the height of the coronavirus pandemic. The last time Bitcoin went through a big boom (the end of 2017) marked its all-time price high of $20,000, a price that investors haven’t seen since.
Those selling now are likely assuming that a $12,000 Bitcoin is as good as its going to get for the foreseeable future. Then again, its also hard not to argue with sellers who want to cash out at triple the value for now, even if they think there’s plenty of room to run.
The Case for Buying and Holding Bitcoin
Buying and holding Bitcoin like any other investment obviously lends itself to a long-term view of the world. If Bitcoin and its fellow digital currencies really are the way of the future, holding onto it at the present price tag is a steal of a deal. The reality is that every time a new group of people becomes interested in blockchain technology, or gambling with Bitcoin and ‘buys the dip’, the basement price of that dip is usually higher than the dip that came before.
Another point to consider is that holding Bitcoin long-term relative to other kinds of investing still means holding for the relative short term in comparison to other kinds of investing instruments. Think about it. Tools like stocks, bonds and real estate are hundreds of years old, but the Bitcoin blockchain only launched in 2009. Considering that, a long-term hold for most retail investors may only be a year or two, whereas a long-term stock holder is more inclined to hold for say, a decade.
Continuing to Profit with Bitcoin
At the end of the day, the choice of whether to cash out your profit now or continue holding Bitcoin is a calculated gamble and a personal decision. If you’re already familiar with using it to gamble, chances are you have a fairly high-risk tolerance already. On the other hand, if you’re already turning a large profit, sitting on some cash (or a stablecoin) for a while and letting the market cool off might also be a good bet.