Reserve Risk

Reserve Risk was introduced by Hans Hauge of Ikigai Asset Management in his 2019 piece "An Exploration of Bitcoin Days Destroyed." Formula: current price ÷ HODL Bank. The numerator is the incentive to sell; the denominator, HODL Bank, is the cumulative opportunity cost long-term holders have absorbed by not selling — every day a holder resists cashing out deposits into this "conviction bank."

Starting from Coin Days Destroyed: daily CDD is normalized by circulating supply, multiplied by price to get the value of coin-days destroyed (VOCD), then smoothed with a 30-day median (MVOCD). The running sum of (price − MVOCD) is the HODL Bank. The longer old coins stay put and the higher the price, the faster unexercised opportunity cost compounds.

Low readings (low price, thick conviction): the best risk/reward for allocation — historically the low zone coincided with cycle bottoms (2015, late 2018, March 2020, late 2022). High readings (high price, thinning conviction as old coins monetize): the worst risk/reward, appearing only briefly near cycle tops. LookIntoBitcoin and Glassnode document empirical bands around 0.0026 below and 0.02 above — but implementations differ across providers (smoothing, adjustments), so absolute values don't transfer between sites.

Reserve Risk is a slow variable — one full swing takes years — and carries zero short-term information. The denominator is an all-history cumulative sum that drifts upward structurally; the original author later proposed an Adjusted variant using a 300-day moving average to correct this. And it rests on the assumption that old coins moving equals conviction weakening — custody migrations and exchange reshuffles drain the reading just the same. Treat it as supporting evidence for cycle position, not a standalone signal.

Beyond cycle positioning, gauge short-term sentiment with market-wide liquidations and BTC liquidation data.