This week Dhruv Bansal the co-founder of Unchained Capital, a cryptocurrency based financial services lending firm released a research study called ‘Bitcoin Data Science: Hodl Waves’ part one. Bansal and his team analyzed the BTC network’s ledger of Unspent Transaction Outputs (UTXO) over a few years and discovered how when BTC lost a large share of value — transactions occurred less because of new investors and distinct holding periods materializing.
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Unchained Capital’s ‘Hodl Wave’ Research
The cash to crypto lending service Unchained Capital had analyzed the Bitcoin core (BTC) blockchain and the network’s UTXOs a few years ago and decided to publish the firm’s data. Blockchains use a ledger mechanism called Unspent Transaction Outputs or UTXOs and this data is timestamped. This means blockchain researchers can figure out when UTXOs were last used in a transaction which has given the company a rich set of data throughout the years.
Unchained Capital created a colored coded chart which calculates waves of age distribution within the digital currency’s UTXOs and their age distribution set back to the genesis block in 2009.
“This chart is fascinating because it displays the macroscopic shifts that have occurred in bitcoin’s ownership through history. Spikes in the bottom, warmer-colored age bands (<1 day, 1 day — 1 week, 1 week — 1 month) indicate large amounts of bitcoin suddenly transacting,” explains Unchained Capital’s research. “The steady growth of the top, color-colored age bands (2–3 years, 3–5 years, >5 years) shows bitcoin that’s not being transacted with, idling between rallies — The interaction between these two patterns illustrates the behavior of bitcoin’s investors during market cycles.”
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