(Reuters) – The “shrimps” of the cryptocurrency world have joined the “whales” in a last-ditch effort to end the “bitcoin winter.”
Both of these groups are HODLers, which means they are long-term investors in bitcoin who refuse to sell their holdings. Even though their portfolios are in the red, they are determined to push back the bears.
Shrimps, or investors with less than 1 bitcoin, are adding to their balances at a rate of 60,460 bitcoin per month, which is the fastest rate in history, according to an analysis by data firm Glassnode.
Whales, or people with more than 1,000 bitcoin, were adding 140,000 coins each month, which was the most since January 2021.
“The market is getting closer to being led by HODLers,” Glassnode said in a note, referring to the group whose name came from a trader’s misspelling of “hold” on an online forum years ago.
After bitcoin’s worst month in 11 years in June, the decline seems to have stopped. According to Glassnode, transaction demand seems to be moving sideways, which suggests that new users aren’t coming in and that a base of users, or “HODLers,” are likely to stay.
Bitcoin’s price has been between $19,000 and $21,000 for the past four weeks. This is less than a third of its all-time high of $69,000 in 2021.
“In the crypto markets, there is a phrase: “diamond hands.” If you haven’t pulled out, you haven’t really lost the money. Neo, a 26-year-old graphic designer at a fintech company in Bangalore, said this online.
As the eighth month of the crypto bear market started, his crypto portfolio was down 70%, but he said he was “okay with losing” that much money. He doesn’t want to sell because he hopes the market will go up in the next few years.
Most HODLers’ portfolios are in the red, like Neo’s, but many of them won’t sell.
A survey of retail investors by eToro found that 55 percent of crypto investors in the U.S. kept their investments after the recent selloff, while 16 percent of investors around the world bought more crypto in June.
Ben Laidler, eToro’s global markets strategist, said that younger investors are more willing to take risks with crypto because they have, say, 30 more years to make it all back.
MINERS’ PAINS
Bitcoin miners are another type of crypto HODLer who are getting more and more stressed out because prices are falling and they have to pay a lot for electricity. Citi analyst Joseph Ayoub said that for some miners, the cost of mining bitcoin is more than its value.
Many of these miners had to take money from their stash because they had to pay back loans on their mining systems.
Core Scientific sold 7,202 bitcoins last month to pay for its mining rigs and keep its business running. This brought the total number of bitcoins it owned down to 1,959.
Even though Marathon Digital Holdings said it hadn’t sold any bitcoins since October 2020, the company said it might sell some of the bitcoins it makes each month to cover costs.
Last quarter, the Valkyrie bitcoin miners ETF fell by 65%, which was more than bitcoin’s drop of 56%.
The crypto winter of 2018 taught us that the miners who made it through were the ones who kept making money even when they were in the red. But that strategy isn’t likely to work this time, said Chris Bae, CEO of Enhanced Digital Group, which helps crypto miners make hedge plans.
Bae said that now, the focus of mining company bosses is on “the need to think through the next crypto winter and have a plan for it before it happens, rather than during it.”