Bitcoin (BTC) HODLer book has marked previous tops and the start of bull cycles. As the ascendant cryptocurrency heads toward $xxx,000, HODLer activity could be a useful tool to potentially gauge BTC's next top.

Since October, as Cointelegraph reported, the HODLing activity of Bitcoin has continuously increased. Fewer HODLers have been moving their holdings, which indicates an overall bullish market sentiment.

Bitcoin HODLer volume. Source: Whalemap

Why HODLer activity is of import to assess Bitcoin market place sentiment

The term "HODLer" refers to long-time holders of Bitcoin. It is possible to rails the action of HODLers past evaluating addresses that have not moved BTC for several years.

If HODLers motion their assets when the price of Bitcoin is going upward, information technology might indicate an intent to sell to take a profit on the rally.

Conversely, if HODLers move their assets when Bitcoin price declines, it could mean they are doubling downwards on their investments.

Hence, based on the price tendency of Bitcoin, a fasten in HODLer activity could betoken that a major price motility is imminent.

For now, HODLer volume suggests that a prolonged Bitcoin pullback is non likely to happen. The volume remains low in comparison with previous peaks, which shows that the confidence of long-time holders remains high.

However, HODLer volume could lag behind and begin to spike every bit the cost of Bitcoin slumps in the well-nigh term. If so, the possibility of an extended correction could still emerge.

As such, it would exist important to observe the HODLer volume in the near term, especially if Bitcoin struggles to rise above $thirty,000.

The technical momentum has been driving upwards the toll of Bitcoin in contempo months. Just if that slows downwardly, HODLers could movement to sell, anticipating a correction to occur from the big number of investors sitting on unrealized gains.

BTC becoming scarcer is a variable

Until the HODLer volume spikes to previous highs, it would exist premature to predict a sizable pullback in the curt term.

Various macro factors, such as the failing dollar and the drop of Bitcoin liquidity, have made BTC more attractive as a shop of value, especially for institutions.

Cointelegraph previously reported that Bitcoin is becoming less liquid due to increasing HOLDer activity.

This means that at that place is fewer BTC that could be bought or sold, which makes BTC more deficient equally it heads into 2021.

BTC liquidity class. Source: Glassnode

Rafael Schultze-Kraft, chief technology officer of Glassnode, emphasized that this is bullish for Bitcoin in the longer term. He said:

"One of the near important #Bitcoin charts in 2020. Liquidity getting squashed, investors hoarding, accessible BTC becoming scarcer. 1M BTC have become illiquid this year, i.e. are held by entities that spend