Liquidity Matters
Happy Bitcoin Friday! — Apr. 4, 2025
Liquidity Matters
It’s a matter of liquidity.
When it comes to volatile price action up or down, liquidity matters. Macro events are about to play a major role in the remainder of this market cycle.
A global trade war is in full effect as of April 2, 2025. Surprisingly, bitcoin has remained relatively flat as traditional markets continue to sell off.
The Halving
It’s been one year!
The fourth bitcoin halving occurred in late April 2024. We’re approaching one year since the halving and sitting in the middle of a bull market.
Where do we go from here in terms of price? That’s tough to say given the macro environment but we have 6 to 8 months of bull market runway left.
The pricing impacts of the halving are typically felt between 6 to 18 months after the halving which puts us at the midway point in a bull run. Revisit my current price levels for both the up and the down side:
Liquidity Crunch?
Traditional markets correcting could bring us toward decreased bitcoin trading activity. We’re in a relatively new place when it comes to bitcoin. Last year, we saw massive increases in terms of bitcoin adoption. The US spot bitcoin ETFs hit the market and new all-time highs brought new highs in terms of overall market cap.
Previous macro pullbacks have seen investors take money out of bitcoin in order to either hold cash or firm up holes in traditional investments.
Bitcoin’s initial reaction to the trade war has been muted. It’s somewhat surprising to see that but that could change if things ramp up in terms of tariffs.
What is clear about the initial impacts of the trade war on bitcoin is that both long term bitcoiners and new bitcoiners or traders are sure to have less capital and liquidity to dedicate toward trading or stacking bitcoin.
HODL Waves
Old coins, new coins, bitcoins!
What are HODL waves? HODL waves should us the age of all the bitcoin in circulation at a given time. It give key context around market sentiment.
“Older coins” are often considered “smart money” the same way that long term investors are when it comes to traditional markets.
“Younger coins” might be traders or newer retail investors who are more active during extreme periods of volatility or especially during bull markets.
In purple are coins greater than 10 years old. At the end of March, the percentage of coins in that age band was about 17%. Add in coins aged 7 to 10 years old and you get another 8% of coins in circulation, meaning that about 25% of all bitcoin in circulation is in the hands of bitcoiners who have been around for 7 to 10 years or more.
57%
In the traditional investing sense, long term capital gains hit after holding an investment for one year. If we look at bitcoin held for at least one year or more, we see that about 57% of all bitcoin has been held for at least one year. A clear majority.
Some Takeaways
Coins greater than 10 years tend to increase over time. Coins in that 3 to 5 years range are something of a sweet spot as it speaks to the 4-year market cycle.
Coins in the 3 to 5 years range tend to increase over time, meaning that maybe newer bitcoiners are learning that it matters to hold coins for at least four years in order to experience a full market cycle built around the bitcoin halving.
More Metrics
HODL waves are a rabbit hole.
They primarily tell us that longer term bitcoiners tend to have greater conviction than shorter term bitcoiners.
HODL waves provide a reminder about investor psychology. Bitcoin is a new asset and technology but humans tend to be predictable in mass.
While I love a deep dive into HODL waves, I watch three key metrics before anything else: price, hashrate, and BTC dominance.
That’s where I start.
They provide foundational insight into bitcoin and bitcoin related markets.
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Enjoy the weekend!
I am not an investment or financial advisor. All opinions expressed are mine alone. Read the full DISCLAIMER on the About page.
HODL on Garth.