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Analysts' Insights

Bitcoin: The Importance of HODL

- by Markus Thielen

Bitcoin surges +165% in 2023, but six previous years outperformed.

We are currently in the fifth Bitcoin bull market after 2011, 2013, 2017, and 2021, but while the returns in 2023 have been strong, they are still lagging the returns in previous bull markets, which typically lasted for 18 months.

Bitcoin’s power surge, averaging 8% on the best 10 days in 2023.

Missing out could cost investors 80% of yearly returns in 2023 – a stability trend since 2015. This shows the importance of staying long in a market that continues to eventually make new all-time highs.

Bitcoin's strongest day in 2023: October 23, with a gain of +10%.

On October 23, 2023, an important day for this year’s Bitcoin rally, two related events occurred, instilling confidence in investors that prices would climb further. First, BlackRock iShares Spot Bitcoin was listed on the Depository Trust & Clearing Corporation (DTCC), a Nasdaq Trade Clearing Firm, suggesting potential consideration for approval by the US Securities and Exchange Commission (SEC).

On October 23, Bitcoin Spot ETF was key.

Secondly, the US Court of Appeals issued an order in response to a ruling mandating the SEC to investigate Grayscale Investments’ application for a spot Bitcoin ETF. The court decision was anticipated after the SEC chose not to appeal its earlier ruling on August 29, which required a review of Grayscale’s Bitcoin ETF application. The court’s 'formal mandate' also came on October 23, as stated in a filing in the US Court of Appeals for the District of Columbia Circuit. This allowed the SEC to re-evaluate its ruling concerning Grayscale’s spot Bitcoin ETF.

Missing the best 10 days in Bitcoin is costly.

Bitcoin prices have declined in three out of fourteen years, and missing the best ten trading days per year would result in seven years of losses. This crucially shows that HODL – staying long – has been the most important characteristic for Bitcoin.

Written by Markus Thielen, Head of Research & Strategy at Matrixport. Author of Crypto Titans.

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