The more popular are the Crypto-currencies, the more disputes are about the methods of fundamental evaluation. This can be helped by the theory that long-term investors have the greatest impact on the price ofwhich continue to hold the asset in spite of everything. Only how to calculate them?
Every day, more and more investors around the world agree that the invention of bitcoin has led to the emergence of a new asset class. It is not yet clear whether the bitcoin price will rise compared to the record levels noted in December 2017. However, it is clear that this cryptoactive, most likely, can not just disappear so suddenly.
At the same time, there are still many supporters of theand Nobel Prize laureates in economics who still do not understand the value of bitcoin.
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With the advent of a new class of assets, the question arises of assessing their fundamental base value.To calculate the theoretically fair value of shares, you can use reports on the profit of the issuing companies, in the case of bitcoin, there is no similar data. In recent years, several different theories of assessing bitcoin and other crypto-currencies have emerged, but those who tried to predict prices based on some traditional valuation method usually failed.
However, there is a theory that has existed for several years, despite the fact that most people ignore it.It assumes that long-term holders exert the greatest influence on the price of bitcoin, and transactional demand is not so important.
For the first time this theory was described in early 2014, but then the article was presented only theory, not supported by empirical data. The main idea is that the price of bitcoins in dollars or any other fiat currency is determined by the desire of bitcoin holders to withdraw it from circulation more than by any other factors.
To better understand this theory, one must understand the psychology of long-term investors in bitcoin.
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Who is a “walker”?
HODL is a memo that appeared due to a typo in the post on the Bitcointalk.org forum as early as the end of 2013, when the bitcoin price collapsed amid tightening regulation in China.
In the post there was talk about the advantages of long-term investment in bitcoin before intraday trading. But then the word HODL turned into a common expression describing the owners of bitcoins who are ready to hold on to their crypto currency almost in any market conditions.
Hodgers are not going to part with their crypto currency, even when the price is falling by 25% per day or 50% – per month. In fact, they buy dips.
Why do they do this?
The Chodlers have built their faith in the use of bitcoin as a means of saving up to the level of religion.Some do this for political reasons (they would prefer the world to use bitcoin as the money, rather than a dollar or another currency), others simply hope to make use of the benefits that bitcoin will bring in the future as a popular form of money.
In short, the crocheters do not get rid of bitcoin, because they believe in it as in digital gold. They understand the value of unregulated electronic money in the world, increasingly dependent on the Internet.
In other words, the trailers are the last stronghold for the bitcoin price.
When enough people sell their bitcoins, only the stalls remain, and at this moment they are ready to buy. As a result, the share of bitcoin in the portfolios of long-term investors is increasing.
A real holler will never sell his bitcoins. Instead, they will patiently wait for the day when bitcoin usage will become ubiquitous and it will be used for everyday transactions.
According to a longtime adept bitcoin and PayPal board member Vincent Casares, the idea is that bitcoin will someday become a global, unrelated standard for investment and payments.
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How to assess their impact?
Long-term investors have a strong influence on the price of bitcoins in the long run, but is there a way to measure the power of their influence? Not really.
The key problem is that it is difficult to detect trailers in the transaction chain. It is unclear whether someone is a real tractor until he has experienced one or two panic sales.
Co-founder FundStrat Tom Lee tracks the common database of bitcoin users, using a combination of the total number of bitcoins and purses and the average volume of transactions in dollars between these purses. But again, not all users of bitcoin are long-term investors.
Of course, there is last year’s study of LendEDU , according to which the average bitcoin holders would be willing to sell it for about $ 200,000 for bitcoin. But again, they can not be equated with trailers.Perhaps, many of the survey participants sold their bitcoins during one of the sharp price crashes noted in the last month. As a rule, it is the attitude to sharp price reductions that separates just long-term investors and true trailers.
Every short-term take-off of bitcoin’s price draws attention to this asset, and newcomers can also turn into brokers. Perhaps those who believe in the future potential of bitcoin should not look for data that would help predict intraday price movements of bitcoin, but heed the advice from the 2013 forum and just keep the asset in spite of everything.
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