Chain data shows a higher „HODLing“ among Bitcoin retail investors who expect a BTC rebound in Q1 2021.

New data shows that the current Bitcoin price action (BTC) shows higher levels of „HODLing“ (not spending or holding) than in previous bullish cycles.

According to chain analyst Willy Woo, an indicator called „reflexivity“ has been rising in recent months. Woo explained that the indicator measures the tendency of Bitcoin investors to maintain their BTC as the price rises. It is essentially an alternative way of measuring the HODLing activity of retail investors.

Bitcoin market capitalisation gain per dollar invested or reflexivity.
This next bull run may eclipse the previous cycle
There are several reasons why retail investors might hold onto their BTC even longer than in previous bullish cycles.

If Bitcoin experiences a run in 2021, most investors would see it as the post-halvary bullish rally. Historically, BTC rallies 12 to 15 months after each halving, recording a new all-time high at each opportunity. Based on BTC’s tendency to rally after halving, retail investors may be „HODLing“ as a strategy to avoid being left out if a strong sustained run begins.

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Bitcoin has also shown a surprising level of resilience through multiple potential black swan events. After its initial spike following the pandemic-induced collapse in March, it has remained above USD 10,000 despite numerous negative events.

In more recent events, Bitcoin’s price plummeted after the U.S. Commodity Futures Trading Commission (CFTC) accused BitMEX of violating the Bank Secrecy Act.

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After the CFTC announcement, the BTC price fell below USD 10,500 but quickly recovered to the USD 10,700 support level. Woo explained:

„This (reflexivity) is the tendency for HODLers to hold on to their currencies more tightly as the price increases. I expected reflexivity to increase during the mania phase of bull markets, but it seems fairly constant since the last two cycles… this cycle is interesting; reflexivity is increasing rather than static compared to the last few cycles. Whilst we now need more capital invested to make a similar percentage price gain, the effect of HODLers holding on to currencies more tightly is magnifying the ’number increase‘ per dollar invested.
Looking ahead to the fourth quarter, industry executives believe that the U.S. presidential election could benefit Bitcoin and positive HODLing data could further boost BTC’s price.

U.S. Presidential Election and Q4 May Further Boost BTC Price
Industry executives and leading investors in the crypto industry anticipate that the upcoming presidential elections in November may benefit Bitcoin.

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Su Zhu, the CEO of Three Arrows Capital, said a Democratic sweep would catalyze Bitcoin due to several macro factors and suggested that a second Trump term could also benefit Bitcoin. He wrote:

„Biden is extremely bullish for BTC because the Democratic blue wave could mark the beginning of an unprecedented installation of the MMT agenda with a corresponding weakening and deficit of the dollar. That said, Trump is also bullish.
As Cointelegraph reported earlier this week, traders, including Peter Brandt, believe that the higher time frame charts point to a strong upward trend for Bitcoin. The combination of favorable technical aspects, strengthening fundamentals, and increasing HODLing could drive a bullish run for BTC in 2021.

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