The data from the platform showsglassThe number of bitcoins held “HODLed” or lost reached a seven-month high of 7,167,889,595 bitcoins, accounting for 34% of the total supply.

This metric is derived by looking at cached bitcoin movement and old bitcoin addresses that haven’t moved in a long time.

According to Glassnode:

Certain cryptocurrencies are definitely lost.

But the majority of lost cryptocurrencies can only be guessed by setting the inactivity threshold after we consider them lost.

The importance of this lies in the correct assessment of investor sentiment and changes in saving behaviour.

Thus, there are drawbacks to using this metric to gauge underlying price drivers and whether Bitcoin is overvalued, undervalued, or at fair value.

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How many bitcoins are lost?

The term “lost bitcoin” refers to the permanent loss of access to a wallet that stores digital currencies.

Since the blockchain is immutable, and there is no third party to seek help in these circumstances, Bitcoin is lost forever and cannot be recovered.

Currently there are many scammers pretending to be lost cryptocurrency recovery companies.

However, millions of dollars in bitcoin and other cryptocurrencies continue to be lost every year.

Cane Island Digital Research estimates that users lose up to 4% of available supply each year.

In the same regard, they delved into their research published in June 2020 on ownership and trading, and revealed that 3.7 million bitcoins were lost, which represents 20% of the available supply.

The Chinalysis analysis was as follows:

• 11.4 million investment.
• 3.7 million lost (defined as tokens that have not been transferred in five years or more).
• 3.5 million switch between trading platforms.
• 2.4 million have not yet been mined.

Of course, defining lost cryptocurrencies as currencies that have not moved in five years or more is inaccurate.

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It is possible that cryptocurrencies in this category are still available but simply haven’t moved in five years.

So it is impossible to accurately determine how much bitcoin has lost due to user error or other unfortunate circumstances.

What is the impact of lost cryptocurrencies?

The loss of bitcoin will reduce the total supply.

In theory, that would make Bitcoin scarcer, and that would act as a driver for the price to go up.

As such, an increasing number of cryptocurrencies held or lost is a good thing for existing traders.

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