Last week, Bitcoin’s price dropped from $29,400 to a low of $25,000. While this decline might appear modest given Bitcoin’s historical volatility, it signifies a notable departure from the tight trading range observed over the past two months.
Yet, even amidst this volatility, the confidence of long-term holders remains unshaken, a sentiment that is crucial to monitor as it often serves as a barometer for the market’s underlying health.
This unwavering confidence is seen in Bitcoin’s reserve risk, an often underutilized on-chain metric.
Reserve risk is a metric used to evaluate the risk/reward ratio of investing in Bitcoin at any given point in time. It’s calculated by dividing the price of Bitcoin by the HODL Bank. The HODL bank represents the value of all coins in terms of their age (i.e., how long they have been held without being spent). The more coins are being held for longer periods, the higher the HODL Bank.
The metric essentially gauges the confidence of long-term ho
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