According to a recent report by Kraken Intelligence, bitcoin’s price increase in 2020 would be due to holders.

The report analyzes the performance of the crypto markets over the course of 2020, up to and including November, and among other things highlights how this year has seen a very significant increase in BTC withdrawn from exchanges on the one hand, and the supply of stablecoins on the other.

This would suggest that:

„organic spot demand for BTC from „hodlers“ is driving BTC appreciation“.

It is also no coincidence that he uses the term „hodler“ instead of holder, because he is clearly not referring to those who buy BitQT to resell them tomorrow at a higher price, but to those who buy them to hold them indefinitely as a store of value.

The most striking case of the year in this regard is that of MicroStrategy, which not only bought BTC for a countervalue of several hundred million dollars, but also chose it as its primary reserve.

By the way, in November the whales accumulated about 56,000 BTC, probably causing the price increase, as they may not be fundamentally speculative purchases.

Kraken, why holders have been driving Bitcoin up.

The point is that BTC purchased by hodlers are effectively taken off the market forever, unless the holder needs to sell them.

That is, these are not bitcoins that momentarily leave the market when they are purchased at a bargain price, only to return after the price eventually rises, but they tend to stay out of the market even when the price rises.

Therefore, Kraken’s report states:

„The movement of coins out of exchanges also indicates that the immediately tradable supply of BTC continues to dry up if market participants move coins into cold wallets.“

He further adds that BTC is in the midst of a new bullish cycle, hit an all-time high in November, and remains very close to $20,000, although many are preparing for a correction.

Incidentally, in 2020 annualized price volatility nearly doubled, on a monthly basis, and in November it returned to April levels.

This recent increase coincided with an increase in trading volume ($86 billion in November), and an all-time high on the exchange of $19,850.

Despite this, the November price appreciation would appear to be congruent with the substantial increase in network activity, i.e., not the result of a simple speculative bubble.

The correlations of bitcoin with other assets have also changed.

The correlation with „risk-off“ assets such as the dollar, gold or US Treasury bonds had risen to around 0 at the beginning of November, but then fell to below -0.7 in the course of the month.

On the other hand, with respect to „risk-on“ assets, such as the Nasdaq, Stoxx 600, and S&P 500, at the beginning of the month it had fallen back to around 0 and then climbed back to around 0.7.

In short, in the last quarter of the month the picture for Bitcoin is changing, and it is even likely that these are not extemporaneous changes due only to speculation.