Bitcoin investors are aiming for the long haul in “mind-boggling” change.

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Jan 17 (Reuters) – As bitcoin heads into 2022, a growing cohort of long-term investors are doubling down on its cryptocurrency holdings, hoping that a December drop was just a festive twist.

Some industry observers point to the underlying stability of such long-term investments as potentially promising indicators for the capricious cryptocurrency.

Since last July, for example, the amount of bitcoin held in digital wallets without outflows for more than five months has been steadily increasing, according to digital currency brokerage Genesis Trading.

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Furthermore, the amount of bitcoin held in “illiquid” wallets – which spend less than a quarter of their inflows – is also increasing, which means fewer coins are actively being traded, he added, citing data from wallets across several exchanges.

“The number of bitcoins that haven’t moved in over a year has been on the rise since July,” said Noelle Acheson, head of market intelligence at Genesis Trading. “It’s pretty stunning.”

However, many investors were sent diving for cover in December, when the world’s most popular cryptocurrency fell nearly 20%, roughly the same as the second largest coin ether, with risk appetite struck by fears of inflation and a faster pace of interest rate hikes from the US Federal Reserve.

While bitcoin and ether both posted gains last week of 2.9% at $ 43,107 and 6.3% at $ 3,350, respectively, they are still far from their 2021 highs of $ 69,000 and $ 4,868.

Bitcoin and US stocks

‘STRONG HANDS’

Many cryptocurrency experts warn that no one is known to reliably predict bitcoin’s typically wild price swings. In 2017, for example, it went from around $ 1,000 to around $ 20,000. In early 2020, it dropped below $ 4,000 at one point before starting a steep rise.

However, proponents of bitcoin and other currencies say the growing acceptance of cryptocurrencies in traditional finance and investment in recent years has supported the industry.

Cryptocurrency research firm Delphi Digital said their research showed a similar shift towards bitcoin held for a longer period by investors, which it said “illustrates a shift from” weak hands “in the short term to” strong “long-term” hands.

According to Will Hamilton, head of trading and research at Trovio Capital, the Coinglass bitcoin Fear & Greed index has fluctuated between 10 and 29 since the beginning of the year, which could be an indicator of a possible market bottom and Purchase Opportunities Management.

“Previous market lows of July 2021 and March 2020 correlated with fear and greed scores of 19 and 10, respectively,” he added.

For the uninitiated, 0 indicates “extreme fear” and 100 is “extreme greed”

MOSS AND STAVES

Meanwhile, there have been more stocks for cryptocurrencies in the past week.

The meme-based dogecoin stole the spotlight after Tesla CEO (TSLA.O) Elon Musk tweeted that the company would accept it as payment for the selected merchandise. to know more

The tweet caused dogecoin to rise by nearly 12%.

“If more people are looking to buy Tesla merchandise with dogecoin, then there is more demand,” Acheson said, adding that this move could improve the fundamentals for dogecoin.

The Solana cryptocurrency was another altcoin in the spotlight, with analysts at Bank of America stating that the Solana blockchain could wrest market share from Ethereum and “could become the visa of the digital asset ecosystem.”

Elsewhere, bitcoin miners have recovered from the mining crackdown in China and the recent unrest in Kazakhstan, one of the world’s leading centers for bitcoin mining. to know more

According to blockchain data provider Glassnode, Bitcoin’s average “hash rate,” a measure of the power of the bitcoin processing network, hit an all-time high of more than 215 million terahashs per second.

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Reporting by Medha Singh and Lisa Mattuckal in Bengaluru Editing by Vidya Ranganathan and Pravin Char

Our Standards: Thomson Reuters Trust Principles.

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