Dhruv Bansal (Bansal Dhruv), co-founder of Unchained Capital, a cryptocurrency Finance company providing loan services, has published the first part of the study «Bitcoin Data Science: Hodl Waves». Bansal and his team have analyzed the dynamics of the table unspent outputs (UTXO) of the network Bitcoin for a few years and found out how BTC would lose a large part of the cost when there has been fewer transactions due to new investors and some periods hold bitcoins.
Blackany use a mechanism registry under the name of unspent outputs (UTXO) and these data have a time stamp. This means that researchers blockchain can find out when UTXO was last used in a transaction. Unchained Capital have created a chart which calculates the wave distribution UTXO digital currencies and their distribution by years, until the first unit in 2009.
«This chart is fascinating because it shows the macroscopic changes that occurred in the Bitcoin network over the years. The spikes on the bottom, painted in warmer colors for different periods of time (<1 day 1 day 1 week 1 week — 1 month) show that a sudden there is a large number of transactions of bitcoins,» reads the study of Unchained Capital. «The steady growth of the upper periods, painted in cool colors (2-3 years, 3-5 years, > 5 years) shows bitcoins, who was not involved in the transaction between the rally. The interaction between these two models illustrates the behavior of bitcoin investors during market cycles».
The researchers also noted the difference of the cryptocurrency market from traditional assets:
«It is impossible to create such diagrams for traditional asset classes. Only bitcoin and other open blackany carefully monitor these data throughout their history. This allows a posteriori analysis of the large-scale behavior in the market.»
The image shows the distribution of the UTXO at different times, pointing out price peaks. White lines represent the «wave storage», which marked the beginning of a new period.
In fact, Bansal and his team discovered the pattern of behavior after each rally, which they call «waves». Researchers Unchained Capital note that most of the wave appears when a large number of BTC involved in transactions during peak market price and then UTXO fall to the new owners. The diagram shows the waves that form different shapes of curves. «A behavior model of nested curves that appear in different periods, it becomes suddenly much thicker (above) later after the rally,» says Bansal.
From the first to the largest wave in the history of bitcoin
The first wave began in the period from January 2009 to June 2011, when the price of bitcoin has risen from virtually zero to 33 $ for 1 BTC. In Unchained Capital note that this wave was not caused by the price rally, and the fact that the BTC at the time did not have a significant value. Early adopters and Satoshi kept their coins because they were worthless for a long period of time. The first wave was the shortest in history – it appears in the picture.
The next wave began in June 2011 ($33) and continued until the December rally 2013 (1,000 dollars).
«Immediately after the rally to $ 1,000 more than 60% of BTC has been spent within the next 12 months. This period marked the time when the average time of last use of bitcoin was the low,» the study says. «Who sold it? Again, investors who bought bitcoins in the past 2-3 years since the peak prices in the $ 33 and before trench 198 dollars.» Unchained Capital calls this wave «Great storage,» 2014.
The biggest «wave storage» was between rally 2013 at the level of $ 1,000 until December 2017, when the price exceeded 19 000. When BTC jumped to 1000 $ per coin, about 60% of bitcoins were older than twelve months, and when the coin rose to 19 000, only 40% of BTC was older than one year.
«For 2017, 20% of the existing bitcoins for the first time participated in transactions in many years», — explained the researchers.
They believe that this phenomenon is responsible for three basic reasons: hardwork Bitcoin Cash and softform Segregated Witness, the initial placement of tokens (ICO) and profit taking.
At the moment after the big splash «kriptimi» a new wave, which shows that the number of BTC over 12 months has fallen to 40%.
«After every big rally came the period of storage of coins. As shown by the data, it begins the formation of another generation of «holders» that are configured to store bitcoins for a long time,» concludes Bansal. «Starting in January 2018, the category of bitcoins by the age of 6-12 months, increased from low of 7.76% to 14.63%».
Bansal and his research team has created an interactive chart that allows you to take a closer acquainted with the different waves. The complete study can be found here.