$Bitcoin (BTC.CC)$ In recent years, bitcoin has gradually be...

$Bitcoin (BTC.CC)$
In recent years, bitcoin has gradually been seen as an important hedging asset. However, the trading volume and circulation of the bitcoin market are relatively small, which means that besides daily transactions, there is a large amount of bitcoin being hoarded in the market for the long term. By analyzing the circulation of the bitcoin market, we can speculate that many holders or institutions have a psychological expectation of bitcoin price higher than the current market price, choosing to hold instead of sell. The reasons behind this phenomenon and its implications for investment strategies are worth pondering.

1. The circulation and hoarding phenomenon in the bitcoin market

Assuming that the current price of bitcoin is approximately $77,000 per coin, then $0.1 billion can purchase about 1300 bitcoins. If an investor wishes to transfer $2 billion in assets to bitcoin for hedging, they would need 26,000 bitcoins, and $10 billion would require 130,000 bitcoins. However, the current situation is that the daily average trading volume in the bitcoin market is only about $0.1 billion, meaning only 1300 bitcoins are being traded. This indicates that the majority of bitcoins are not frequently traded but instead hoarded in large quantities.

Since the inception of bitcoin, many early holders' bitcoins have not circulated, indicating that currently only a small fraction of bitcoins are actually used for transactions. In other words, currently only approximately $0.1 billion worth of bitcoins are in circulation, while the majority of bitcoins may be held for the long term, hidden from the market.

2. Psychological analysis of hoarders' expectations for bitcoin investments

Individuals and institutions holding a large quantity of hoarded bitcoins likely have a psychological expectation of the price being higher than the market price. When they cannot reach their desired price level, they will not easily sell. There are several core reasons behind this mentality:

1. Belief in long-term call
The scarcity and anti-inflation characteristics of bitcoin have led many investors to see it as "digital gold." Against the backdrop of global economic uncertainty and rising inflationary pressures, bitcoin is gradually being viewed as a hedge tool. Therefore, holders have confidence in the long-term rise of bitcoin, choosing to hold coins and wait for prices to further increase.

2. Market Growth Potential
Many holders believe that the bitcoin market is still in its early stages, with potential for significant capital and institutional investor participation in the future. If more insurance companies, sovereign funds, or even national-level investors start allocating bitcoin, it will further increase demand and drive up the price of bitcoin. Therefore, holders are willing to wait for this potential market demand growth.

3. Price Volatility and Psychological Price Levels
Bitcoin whales or long-term holders often have higher expectations for future prices, believing that current market fluctuations are only temporary phenomena. Due to the psychological expectation of high prices, they prefer to hold coins for a price increase, choosing not to sell.

4. Tax Avoidance and Asset Protection
Some investors or institutions may use bitcoin as a way to preserve assets, hoarding coins to avoid capital gains tax or mitigate the risk of fiat currency depreciation. These types of investors are more inclined to hold bitcoin for the long term rather than engage in frequent trading.

5. Distrust of the Global Economy and Financial System
Some hoarders are skeptical of the traditional financial system and believe that bitcoin, as a decentralized asset, can provide security in times of economic crisis. Therefore, they choose to use bitcoin as a long-term tool for hedging financial risks.

6. Price Expectations of Halving Effect
Bitcoin's halving mechanism occurs every four years, resulting in a reduction in the number of new bitcoins and increasing scarcity. The next halving is expected to take place in 2024, which will further decrease bitcoin supply. Most hoarders anticipate that the halving effect will drive up the price of bitcoin, so they are willing to hold bitcoin and wait for the next market uptrend.

III. Insights for Investors: The Advantage of Long-Term Holdings

Based on market history and bitcoin price trends, investors who hold bitcoin long-term often achieve higher returns. There are several key reasons behind this:

1. Long-term upward trend of bitcoin prices
Despite significant price fluctuations, bitcoin shows a gradual upward trend overall. Long-term holders are better able to capture the cyclical market uptrends and avoid missing out on profits due to short-term fluctuations.

2. Value appreciation opportunities from the halving effect on supply
As the continuous halving of supply increases the scarcity of bitcoin, the expectation of price rise is enhanced. Long-term holders can take advantage of this opportunity to achieve higher investment returns, while short-term holders may miss out on these opportunities by exiting prematurely.

3. The hedging property of risk
Bitcoin, gradually being accepted as "digital gold", becomes a hedge option in global economic uncertainty. Long-term holders can utilize bitcoin's hedging characteristics to add risk-resistant elements to their investment portfolios, especially during periods of economic turbulence.

4. Signal of institutional participation
With more and more institutional investors entering the market, the stability of the bitcoin market gradually improves. This trend indicates market confidence in the future of bitcoin. Long-term holders can benefit from institutional participation, and this trend brings greater potential value to bitcoin in the future.

Conclusion.

In conclusion, investors or institutions hoarding bitcoin typically hold optimistic expectations for the future price of bitcoin and are unlikely to sell in the short term. This phenomenon not only results in relatively low market circulation, but also provides a certain level of support for prices. For ordinary investors, choosing to hold bitcoin long term can avoid emotional disturbances caused by short-term fluctuations and maximize potential returns. However, all investments come with risks, and investors should reasonably plan bitcoin allocations based on their risk tolerance and investment goals to achieve the best investment results.