What Is Reserve Risk?
Reserve Risk weighs the confidence of long-term holders (measured by coin-days accumulated or "HODL bank") against the current price. When the price is low and long-term holder confidence is high (lots of coin-days banked), Reserve Risk is low — indicating an attractive risk-reward for entering the market. When price is high and confidence is being spent (distribution), Reserve Risk is high.
How Reserve Risk Works
Reserve Risk = Price / (HODL Bank), where HODL Bank is the cumulative opportunity cost paid by holders who chose not to sell. A low Reserve Risk means holders have been accumulating and refusing to sell for an extended period despite high opportunity cost — extreme conviction. A high Reserve Risk means holders are finally spending their accumulated conviction by selling.
Why It Matters for Traders
Reserve Risk entering the green zone (below 0.002) has historically aligned with the best long-term buying opportunities in Bitcoin. The metric captures something unique: not just whether coins are being held, but the cumulative sacrifice (opportunity cost) holders have endured. This makes it a pure measure of long-term holder conviction relative to price.
