• 12 million coins locked up for 12 months
• Bitcoin price at lowest low in 12 months

A blockchain analyst, Block Bunny, says that it is not going to end well for Bitcoin if most people keep on hodling. Block Bunny made the comment on May 25, after a Glassnode report showed that 12 million bitcoins have been sitting in their wallets in the past 12 months.

Hodling is a concept that encourages people to stash bitcoins in wallets without bothering to spend it. This is done with the hope that the price of the asset will rise in the future and the holders will become rich.

There have been speculations that Bitcoin could rise as high as $1 million. This has inspired people to buy and keep the asset hoping for the time when they would cash out their coins super rich.

Based On Gresham’s Law

Block Bunny, who based their assertion on Gresham’s law said that with many people hodling 12 million bitcoins out of a total of 21 million, that

“It’s not going to end well for $BTC if most people just keep hodling”

12 million bitcoins have been sitting in their wallets in the past year. These coins have not been moved by their owners according to data available from  Glassnode. According to Brittanica,

“Gresham’s law, observation in economics that “bad money drives out good.” More exactly, if coins containing metal of different value have the same value as legal tender, the coins composed of the cheaper metal will be used for payment, while those made of more expensive metal will be hoarded or exported and thus tend to disappear from circulation.”

Fewer Investors Accessing BTC

To some analysts, this is good news for Bitcoin since it is an indication that there are less coins in circulation. This creates scarcity, which will catalyze a rise in the value of the cryptocurrency.

Apart from that, this may not really be good news for Bitcoin. With more than half of Bitcoin’s total circulation locked up, the purpose of the currency as a means of exchange may have been defeated.

Also, the inflow of investors is an important factor that determines the price of the asset. With all those coins stored away, there is a limit to available coins that future investors could take advantage of to enter the market. A user on Twitter, Trong Phan, echoed this view by saying:

“but we need new capital to pour in to have price go higher”

7 Million Bitcoins in Circulation

Considering that there are 19 million bitcoins that are known to be moveable, with 12 million bitcoins out of circulation, there are just 7 million Bitcoin supply.

The price of bitcoin has been at an all time low in 12 months. A BTC investor Bitcoin Eagle URSF said:

“It doesn’t matter at all. The remaining coins can have very high velocity and some of those non-moving coins can even be lightning channels with orders of magnitude higher velocity. And anyway most liquidity is on exchanges not on chain.”

A user at Reddit, Tiggsweld, agrees based on the volume of coins in exchanges in 2020 compared to the current volume. Their comment on Reddit says:

“Yeah but the exchanges show balances from like 2020 at 2,500,000 and now only like 2,300,000. So in 2 years not much has left the exchanges. I could be wrong about the numbers , going based on memory. But I remember thinking , ” dam with all the crazy about hardware wallets in the last 2 years, not much has moved.”

Market Impact of Unmoved Coins

Some analysts believe that there is no evidence that immobile coins have an impact on the price of BTC. @SillyScalper wrote:

“Hasn’t this been the message since $btc was like 48k? I mean great, but it has zero to do with price. At least in the short term, those who exercised proper risk management during a bear market have almost 2x as much capital now. “

Even though it is not clear the class of investors who own the immobile coins, some analysts believe that it gives large holders the leverage to manipulate the price of Bitcoin, since the price of low volume assets are easier to manipulate.

According to @Kerbstone10,

“And this is why the whales more than ever can do what they want with the price. Fictional plateaus are clearly designed and it’s clear there is intention to drive the price down and almost nobody is going to catch that next move up”