Reserve Risk, explained

Core ratio

Price ÷ HODL Bank

explained below

Accumulation

≤ 20th pct

cheapest fifth of its history

Overheated

≥ 80th pct

most stretched fifth of its history

Data source

CoinGlass

daily, since 2012

A ratio that weighs two things against each other: how confident long-term Bitcoin holders are, and where the price currently sits. Confidence high, price low — Reserve Risk is low, and buyers have historically been well rewarded for the risk they took. Price stretched far above that conviction, with old coins starting to move — Reserve Risk is high, and the cycle looks late.

It was designed as a single number that captures a simple intuition: the most patient holders sitting still through a downturn is a good sign, and those same holders finally selling into a rally is a warning.

Reserve Risk is roughly price divided by HODL Bank. HODL Bank is the running total of the profit long-term holders have passed up by not selling. It builds from Coin Days Destroyed — a measure, taken straight from the blockchain, of how much old, long-held coin moves on a given day (and MVOCD, the same idea weighted by what those coins are worth). The longer and more stubbornly holders sit on coins instead of cashing in, the larger HODL Bank grows.

That makes HODL Bank the half of the ratio that pushes Reserve Risk down: a big, rising HODL Bank against a contained price keeps the ratio low. When price runs up while HODL Bank growth stalls — because old coins are finally moving, spending down accumulated conviction — the ratio rises.

Reserve Risk has trended lower for over a decade as the network matured and HODL Bank grew ever larger. A raw value that looked elevated in an early cycle can be unremarkable today, so pinning the read to a fixed number goes stale. Instead the zones come from where today's value ranks against the entire history:

Accumulation is a reading at or below the 20th percentile — in the cheapest fifth of everything Reserve Risk has ever read, and historically the point where patient buyers were best rewarded. Overheated is at or above the 80th percentile — in the most stretched fifth, historically a reason for caution. Everything between those two levels reads as Neutral, which is where the indicator spends most of its time.

The ranking is the fast read. Rather than wrestling with the raw index, look at the History Percentile — where today sits against every day since 2012. Low means cheap relative to holder conviction; high means stretched. The Zone label says the same thing in a word.

The supporting lines explain the number, they don't add a second signal. HODL Bank and the two old-coin-movement lines, VOCD and MVOCD, start hidden on the chart. Switch them on to see the ingredients — a rising HODL Bank with flat VOCD is quiet conviction building; a jump in VOCD is old coin finally moving.

Extremes matter, the middle doesn't. Most of any cycle is spent in the neutral band. The signal lives at the two edges.

Read Reserve Risk as a patience gauge, not a trigger. Low in its range, time is on the buyer's side; high in its range, the easy gains are likely behind you.

Reserve Risk measures holder conviction, and only that. It says nothing about borrowed money in the futures market, coins moving on and off exchanges, or the state of the wider economy — only whether the people who have held the longest are holding firm or starting to spend. It does one job, and it does it from the blockchain's public record, which anyone can check.

It is not one of the ingredients in our Bitcoin or Ethereum Heatmeter scores — those combine a different set of indicators. Reserve Risk has its own chart, read alongside price on a log scale, where equal steps up the axis mean equal percentage moves, so you can weigh conviction against price across full cycles rather than in isolation.

Others in price & cycle models — What price is doing relative to its own history, trend and long-run models.

• Risk WaveHow far price has stretched from its long-run average, adjusted so Bitcoin’s wild early years don’t dwarf recent moves.
• Oscillator RiskHow today’s market conditions rank against every reading on record — 0 is the calmest, 100 the most stretched.
• BDZOur own measure of how far Bitcoin’s price has stretched from its recent average, in either direction.
• RSI Cross SignalA popular momentum gauge crossing its own average — a sign the direction is turning, not just that price has run hot.
• RSI HeatmapMomentum across many coins and short time windows at once, plus a 0-100 risk reading for whichever coin you pick.

Every indicator we track — the full glossary.