Postive Growth in HODLers (Factual Evidence!)

Hey guys and welcome back to Box Mining. It's been a while since my last video and that was because I just finished my vacation where I went to Bali to do a little diving adventure. I got some catch-up to do with you guys and one of the most, I feel like, underappreciated facts that have hit us in the space is this report by Chainalysis. So this is what I'm going to talk about in this video, this report of what's really happening with the Bitcoin ecosystem. Because what they did, Chainalysis, they're a company that examines and analyzes the Bitcoin blockchain and it's important to recognize that Bitcoin, even though it's pseudo-anonymous, we can track exactly what wallets hold what and when they exit to exchanges, etc. So what these guys have done is that they provided factual evidence of more holders coming into the space and newer holders and the fact that the new speculators that just want some quick bucks, the speculative coins, that's actually not increasing over the summer. We're going to look at how they derive this data and we're going to look at some of the implications of that in this video. And before we start, of course, if you guys like analysis like this and daily updates, do click the subscribe button and of course, click the like button on this video as well. And of course, everything covered here is my personal opinion and not financial advice. So let's get straight into this. What Chainalysis has done is they categorized different Bitcoins into categories. So the red, what they label here as red, they call it M0. These are the spectral coins. These are the coins that are new investors potentially coming in and trading actively. So you see a lot of transactions for these coins and that's how they track them as these clusters of active coins. M1 coins are service transactional coins. So these relates to purchases. These relate to people actually using it and they have to transfer it. So not just for speculation, but for usage. M2 is likely investment coins. So these are coins that are bought for long-term holding. This is very important because this represents the healthy part of the ecosystem. The people who are willing to see Bitcoin increase value in the extreme long run. So they're not selling it in an annual or monthly basis. They're keeping it for longer than a year. And M2 and M3 are likely lost coins and M3 are lost coins or unmined coins. So they're coins that are not yet minted. So what is this telling us? So this is telling us that right now 23% of Bitcoins are deemed speculative coins. They're held by people who are actively trading, actively exchanging that to their crypto exchange wallets and trading that on the market. They have been moved recently and their selection criteria for this. You can look at this report here of how they classify this is that the cluster is spent within 10% of their block height. And that kind of correlates to around one year for Bitcoin or one month for Bitcoin cash. So what can we derive from this? Well, what they did is they looked at this ratio of coins over a almost two and a half year period starting all the way from 2016 to what we are right now in August. They ended up in July, August of 2018. In fact, I'm going to do my own version. This is the one that I drew with the price of Bitcoin as well. So I overlay the price onto this graph and I'm going to be a weatherman right now. I'm going to point here. So these are the speculative coins. This is in red orange. This is a transactional usage coins. These are the holders right here. This quite a big bunch of people. That's the holders up there. These are likely lost coins and these are lost or unmined coins. So what can we kind of tell from this? What we see here is that over time, especially in this area right here, we had a huge new influx of speculative coins. These are people buying up new people who heard about Bitcoin and buying it. And where are they buying it from? They're buying it from the long-term holders. So long-term holders, they're cashing out a little bit of their supply and selling it. And this is actually really good because you want Bitcoin to be held in as many different hands as possible. The more whales, the more large holders there are, the more vulnerability and more power they can substantially affect the price of market if they drastically want to do something or sell it in a very quick amount of time. So what we see here is that in January, just before January, we have a spike of sell-offs to new speculative coin holders. And then the good news, what they're pointing out as well in the article is that after January, we have a flat line and in fact, it almost goes down right here. So let's move aside. So towards late July, we actually see a decrease in the number of speculative coins. This is actually really good news. So what we see here is that there is a new breed of long-term holders. And one of the questions I asked myself was why didn't this decrease sharply? When the bear market hit, we actually probably expected to see a less fewer speculative coins because we saw that the talk, you know, even the trend talk for Bitcoin has been decreasing. Why are we not seeing a sharper decrease? And that's because of the length they use to classify coins as non-speculative, as likely investment coins, because they have to wait for a whole year. So what we can see is that this is very much a delayed graph. So for real holders to show up, you have to wait a year for those guys to show up for this to really drop. So that's why having a flat line really is quite good news. It's good news to say, look, people aren't dumping their coins right now. There's less dump right now. It does say, of course, that there are less new players entering the market, which is reflected in what we see with Bitcoin trends, Google trends on search term for Bitcoin. You do see that after January, the period here from January all the way to May to now September, the search volume and interest over time is decreasing. But that's kind of characteristic of a bear market. The new players just don't want to enter, even though the price is decreasing and tempting them back into entry. I think one of the topics that's talked about right now for Bitcoin price is that there is a solid resistance at 6,000. And a lot of people are looking to that and wondering, okay, if we break 6,000, what's going to happen? I think one of the topics I heard recently that was discussed is that having good entry points nearing that entry point or even perhaps going lower allows for new players to come in because what's important and what's important to recognize is that the next bull cycle won't start until new players come in. It's simple as that until new interest comes, new guys buy up Bitcoin, buy up and eventually the rest of the crypto market. And this is why Bitcoin is very important because it's the market leader. So unless new players come in, unless new interest for crypto and Bitcoin comes in into new player and new players hands, then we're not going to see the growth that we saw in January. What we have to realize is that this, what we're seeing in terms of trading, we're seeing the top, we've seen the top of the iceberg. These are the spectator coins. These are the traders. And right now, because the holders, they don't trade because holders don't actually sell and trade and they might keep for longer than a year. They don't drastically affect the day to day price action of cryptocurrency. But in fact, what we just see in terms of trade volume, that's just the spectator of coins. That's just the people playing on bitmex, playing on OKX, trying to make some money during a time when the markets are not making any substantial movements up. Whilst the rest, the bigger part, the bigger part of the crypto community, they might not even be as active on forums. They might not be talking as much because they're holding, they might be holding full-time jobs. That's what we want. We want businesses. We want different, you know, workers, businesses, just your average Joe on the street. You want them to be holding Bitcoin, but you don't really need them to be speculated every day. You just need them to know that this is an asset that they can keep, that this is something that the government cannot have any control over. It's not centralized. And this is a way to store and transfer value around the world, globally, internationally. Those are aspects of Bitcoin that cannot be taken away from us by any party. And this is why I'm excited for the future. I'm excited for the bottom part of the iceberg to build up because with strong hands, we can move and then we can talk about positive price action. And what this data is showing us is exactly that. I also love to hear what you guys think of this data as well. Do you see this as good news? And also, of course, are you a long-term holder? I love to hear your, you as a long-term holder, how you're holding onto things and your experiences as well. I also have this very interesting talk today. So this is with David Shum. He invented DigiCash, the precursor to Bitcoin. It was all the way back with papers published in 1982. That's how early this guy was into this idea of using public and private keys for a way to track currency. Of course, DigiCash wasn't successful, but it paved the foundation for what became Bitcoin. And I get to interview him and talk about our cryptocurrency, the future of money and trust. Just to see someone who's been here for such a long time and talk about it. And I'll show you guys a video. Of course, you might guys might say David's starting a new project called Elixir as well. So that's the reason why he's coming out and doing so many interviews. But what I wanted to focus on was his experiences building coins, what he learned from DigiCash, what he liked about blockchain. So this will be an upcoming video. And also, if you're in Hong Kong tonight, go check it out. It should be plenty of fun. Guys, thank you guys so much for watching this video. Remember to click the little subscribe button and click that notification bell to be notified of new exciting videos that are coming up. Thank you guys so much for watching this video. See you next time.