Ikigai Fund Research Urges Investors: “It’s Time to Buy Bitcoin” Using BTC Days Destroyed (BDD)
Senior quantitative researcher at Ikigai Fund, @hansthered, believes this is the best time to buy Bitcoin as the metrics points to the start of a bullish cycle in coming months.
In a series of tweets on August 21, Hans HODL (handle name), explained that Bitcoin’s demand metrics show the appetite for investors to own the asset class, and with a fixed supply system, price is bound to increase.
In fact, recently there's been quite a bit of accumulation (or what you might call dormancy, a lack of 'destruction'). A few people are always going to take short-term profits, but that's to be expected in any market. pic.twitter.com/YnlCmkWPTn
— Hans HODL (@hansthered) August 22, 2019
The Adjusted Bitcoin Days Destroyed (BDD)
This is a metric that is used to measure the overall investor sentiments on moving Bitcoins across wallets – representing actual use of the coins. According to the report by Ikigai Fund, BDD can be explained as follows;
“Once a Bitcoin has been idle for a period of time, moving that Bitcoin “destroys” the number of days that it has accrued.”
However, given that new Bitcoins are created daily and exchanges sometimes moves coins from cold storage to another to enhance security, an Adjusted BDD is preferred to remove the extreme and non-event actions on movement.
The Adjusted Binary Bitcoin Days Destroyed (BDD) chart showing its time to buy BTC. (Image: Kana and Katana)
The table above represents the Adjusted BDD represented by the red lines. Bitcoin boom tops usually form clusters – a point we are yet to reach. As seen above, in 2017, the red lines were more clustered, similar to periods in 2014. The pattern of the lines currently resembles the start of 2017, months before the Bull Run to ATH price.
Despite a number of investors cashing out in the past few weeks, leading to stagnation in BTC’s price, Hans believes the market is accumulating more coins. He said,
“In fact, recently there's been quite a bit of accumulation (or what you might call dormancy, a lack of ‘destruction'). A few people are always going to take short-term profits, but that's to be expected in any market.”
Bitcoin analyst firm, Plan B, believes a hike to $70,000 USD by 2023 is a very low prediction given the statistics backing up the growth of BTC.
The drop in hash rate given some miners switch off mines when prices drop will push the price back up as seen in previous bull momentums.