Introducing Whale Alert’s HODL metrics
A common trait shared by crypto whales is that they tend to hold on to their assets for extended periods of time (if they didn’t they would not be much of a whale). But how long does the average market participant HODL their assets? HODL metrics are a way of visualizing market participant behavior and strategies and help quantify the level of trust in an asset. For instance, store of value assets like Bitcoin have long HODL averages, while meme coins like PEPE tend to have relatively low HODL averages. An increase in average HODL time could indicate that on average participants expect prices to increase, while a decrease could indicate the opposite. HODL metrics are essential for formulating any trading strategy.
Average Buy Time
An addresses’ average buy time (ABT) tells us when on average its current balance was acquired. It is determined by adding a weight to the timestamp of an incoming transaction based on the asset amount and averaging that with the average buy time of the existing balance. For example, an address received 1 BTC on the first of January 2015 (Unix timestamp 1420066800), and spends 0.5 BTC some time later. It then receives 2 BTC a year later on the first of January 2016 (Unix timestamp 1451602800). The average buy time then is: (0.5 * 1420066800 + 2 * 1451602800) / (0.5 + 2) = 1445295600 or the 19th of October 2015. Calculating the average buy time is similar to calculating an addresses’ Average Buy Profit.
Realized HODL
The Realized HODL (RHDL) shows how long an address held on to a transferred asset by subtracting the average buy time from the time of the transfer. For instance, using the example above we can determine the RHDL for the address for an outgoing transaction of 1 BTC on the 22nd of July 2022 (Unix timestamp 1658440800): 1658440800–1445295600 = 213145200 seconds (or around 6.75 years). The RHDL for all the addresses used in transactions at time (t) is found by using a weighted average based on transaction amount.
Continuous HODL
The Continuous HODL (CDHL) indicates how long an address has been holding on to their current balance of a specific asset. It is calculated by subtracting the ABT from the current time. CHDL can be used to calculate the average holding time for the entire available supply of an asset, allowing us to answer questions like: on average how long was a bitcoin being held on an address at a given time?
The above metrics can also be used for the entire market, making it possible to know how long on average a single unit of a cryptocurrency is being Hodl-ed and what the average hodl lengh for all transfered assets during a specific period. The resulting data provides key insight into the general mood of the market; a constant gradual increase in contiuous HODL time for the entire market suggests a positive outlook on the price development of a cryptocurrenct, while strong drops in realized HODL might indicate that long term holders are exiting the market.
Whale Alert’s HODL and other metrics are blockchain agnostic, meaning that they can be applied to any asset on any blockchain. Whale Alert offers a range of metrics and alerts that help traders make informed decisions. Check out our website for more information.
