According to on-chain data, as the merge approaches, the dominant behavior across the Ethereum (
$1,996.83 ) network is to HODL. Coins held by Ethereum ( $1,996.83 ) investors are maturing to showcase a higher number of HODLers unwilling to sell.
Within the Ethereum ( $1,996.83 ) ecosystem, just under 60% of investors have held for more than one year, compared with Bitcoin (
$84,346.00 ) , which has 80% of HODLers holding for the same period of time.
However, we are now seeing 7-year holders (dark blue) of Ethereum ( $1,996.83 ) start to increase. From July 28, the first 7-year holders began to show and now hold over 2% of the supply.
Ethereum ( $1,996.83 ) : HODL Waves (Source: Glassnode)
Given that Ethereum ( $1,996.83 ) mined its first block in July 2015, coins that haven’t moved in 7-years are likely genesis coins that have never moved. As time goes on, it is expected that the 7-year HODLers will continue to grow as HODLers who entered the Ethereum ( $1,996.83 ) ecosystem during the 2017 bull run start to emerge.
Unlike Bitcoin ( $84,346.00 ) , Ethereum ( $1,996.83 ) is not often referred to as a store of value. However, on-chain data suggests that 2% of Ethereum ( $1,996.83 ) holders believe it could be. Depending on the activity of the network, Ethereum ( $1,996.83 ) may also be deflationary after The Merge, which adds credence to this theory.
Bitcoin ( $84,346.00 ) has an in-built inflation rate of 1.7%, whereas Ethereum ( $1,996.83 ) could see deflation of 4%, almost 6% lower than Bitcoin ( $84,346.00 ) . Yet, Ethereum ( $1,996.83 ) has robust utility across its network, so a lack of available ETH due to investors holding could impact the network’s performance.
Inflation is a tool designed to encourage spending. If Ethereum ( $1,996.83 ) becomes deflationary, there will be little incentive to transact on the network.
Further, almost 32m ETH was sitting on exchanges in mid-2020. However, two years later, the amount of ETH dropped to just 20m. The number of long-term HODLers, inflation rates, and supply on exchanges are significant long-term trends required to understand supply/demand dynamics
Ethereum ( $1,996.83 ) : Balance on Exchanges (ETH) (Source: Glassnode)
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