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Santiment: Weak Hands: Whose long-term HODLers sold off the most (and least) since the crash?

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Takeaway:

  • By analyzing on-chain behavior of long term investors, we can determine which ERC-20 coins had the ‘strongest’ and ‘weakest’ HODLers since the drop, and what that tells us about the state of the market
  • Assets covered: top 200 ERC-20 coins + Ethereum
  • Metrics used: Token Age Consumed, Trading Volume, Daily Active Addresses

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Token Age Consumed (also known as Coin Days Destroyed) is one of the best on-chain indicators of long-term holder behavior, and can often signal market-wide pivots or paradigm shifts in HODLer sentiment.

At its core, Token Age Consumed puts more weight on the coins that have remained idle (i.e. haven’t moved from their current address) for a long time, compared to those coins that were only acquired in the past few days or weeks. As a result, elevated Token Age Consumed levels are meant to signal the sudden rise in activity of those coins that have been inactive for a prolonged amount of time.

The premise behind the metric is simple – long-term HODLers and veteran traders rarely make rash decisions, and will execute most of their trades based on extensive analysis and/or intimate market knowledge. For this reason, spikes in Token Age Consumed can often correlate with major shifts in market conditions and the coin’s short-term price action.

For example, the chart above shows Ethereum’s Token Age Consumed chart for the past 3 months. You’ll notice that most if not all of the recent outliers correlate with the token’s interim tops or local bottoms, demarcating growing swings in ETH holder sentiment.

Weeding out ‘Weak Hands’ with Token Age Consumed

Because of this, Token Age Consumed can also be a very interesting gauge of HODLer confidence and ‘loyalty’, assuming that the majority of TAC spikes indicate a desire for certain long-term investors to sell/reduce their current position (more on this in a second).

This loyalty has been particularly tested over the past several weeks as the coronavirus pandemic toppled the financial markets, affecting everything from blue chip stocks to Bitcoin and beyond.

In these uncertain times, some long-term investors undoubtedly decided to exit the crypto market (typically into stablecoins), at least while the ground settles and the markets go back to normal.

But did all long-term investors react this way, no matter the coin? Or did certain coin HODLers panic more than others?

To find out, I decided to calculate the average coin age of the top 200 ERC-20 coins + Ethereum since March 11th (the day before the crash) until today, to see which coins exhibited the worst case of ‘weak hands’ and which commanded the greatest amount of composure among their long-term investors.

P.S. all calculations were made using Sanpy, Santiment’s custom Python wrapper that lets you tap into on-chain, social, pricing and development data for 900 cryptocurrencies. Check it out here!

A snippet of our SanPy Python wrapper in action

To add to the quality of the results, I’ve also filtered out the results to only include the coins with an average daily transaction volume of >$1m (ensuring some liquidity if HODLers were indeed to sell) as well as those with an average of at least 100 daily active addresses (to discount coins with extremely low levels of network activity) since March 11th onwards.

Let’s start with the top 10 ERC-20 coins (that fit the above parameters) that recorded the longest average age of coins that moved since March 11th:

Reserve coin (RSR) tops the list, with the average coin age of 111.7 days, indicating that a lot of old Reserve coins have been on the move since the market-wide collapse. This is quickly confirmed on RSR’s token age chart, which has been lighting up since March 11th:

To confirm our assumption that this indicates a growing desire among long-term RSR investors to offload their bags, the coin’s exchange flow chart shows massive inflow of RSR to exchanges in the past 20 days, starting around the time of the dump and only increasing as RSR started to recover.

This indicates that a number of seasoned investors waited for the first bounce back to dump their RSR bags.

Interestingly, RSR is by far the ‘worst performing’ coin in this regard. The average age of all NMR (the second coin on the list) that has moved since the crash is 83.9 days – almost 4 weeks less than Reserve’s.

After NMR, DATA and ANT, there’s another sizable gap before the next batch of coins. For example, Status (#5 on the list) boasts an average coin age of 61.4 days, with most of the old SNT coins moving on two occasions – a) during the post-crash bottom, and b) right at SNT’s latest $0.0179 top. As you can see the coin has already started correcting since the recent TAC spike, as is often the case:

Rounding out our list of the 10 oldest coins moving since the crash (on average) are REP and IOTX, with an average coin age of 44 and 42.2 days, respectively.

For better or worse, those invested in these 10 coins reacted the most acutely to the recent market conditions, indicating a growing lack of confidence in their short-term potential and their ability to successfully weather the recession.

On the other side of the coin, breaking down the ‘youngest’ coins (on average) that moved since the correction provides valuable insights about the current state of the crypto market. Here’s the list:

6 of the 10 coins with the lowest average age since March 11th are stablecoins, further confirming that these have been the cryptocurrencies in highest demand since the market collapsed.

Stablecoins have been changing hands at a rapid pace over the past 20 days, as many market participants seem to have moved to low-volatility alternatives to weather the storm. In fact, the collective market cap of top stablecoins has grown by more than $1.5b since ‘Black Thursday’, making them the clear winners of the latest market-wide correction.

DAI tops – or, more accurately, bottoms our Token Age Consumed list. The average age of all DAI that moved between March 11th and current time is a measly 0.6 days:

The biggest spike in DAI’s Token Age Consumed occurred on March 25th (the average age of DAI jumped to 4.13 days), which correlates squarely with the sudden withdrawal of ~8m DAI from the DSR (Dai Savings Rate) smart contract:

Outside of the stablecoins, however, it’s also worth mentioning those very-much-volatile coins that found themselves at the bottom of the list, indicating a very steady hand among their long-term holders

In particular, Lambda (LAMB) and Bancor (BNT) HODLers have mostly stayed dormant since the market collapse, despite the 40%+ drop experienced by both coins. While this could signal strong investor confidence in these assets at times of extreme volatility, the lack of old coins moving could also be due to the fact that these coins – and especially LAMB – have not yet experienced a notable bounceback – at least not one that would prompt their holders to sell:

Final Notes

This report was produced using Santiment’s growing suite of market and network analytics tools – Sanbase and Sandata – which help users analyze the crypto market and find data-driven investment opportunities.

Santiment provides clean and reliable on-chain, social media and development information on over 1000 crypto assets, and develops unique metrics, signals, strategies and reports on top of our custom datasets.

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About Santiment

Santiment is a market intelligence platform that adds context to crypto. They provide clean data and tools for market research, behavior analysis, trading and risk management, and coin/project due diligence. 

The project collects on-chain, social media, pricing and development information on 800+ coins and their networks, and uses this data to create custom tools, metrics and unique market insights.

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