Reserve Risk, a Glassnode on-chain measure of Bitcoin HODLer conviction, has dropped to a record-low level, signaling that HODLer conviction is at record highs. The Bitcoin Reserve Risk indicator hit a new record low of 0.000729 when FTX, one of the biggest centralized bitcoin exchanges in the world, collapsed. Since then, it has increased to a little above 0.0010.
Reserve Risk is employed, following Glassnode, to gauge long-term investors' confidence in the native coin's price at any particular moment.
Glassnode's "HODL Bank" index, which measures an accumulation of unspent "opportunity cost" collected by HODLers the longer they refuse to sell, captures the conviction of long-term investors. Thus, Reserve Risk is determined by dividing the current Bitcoin market price by the HODL Bank index rating.
According to Glassnode, the risk/reward of investing in Bitcoin is favorable when confidence is strong, and the BTC price is low (i.e., when the Reserve Risk score is low). Conversely, when confidence is low, and the cost is high (i.e., when the Risk Reserve score is high), the risk/reward ratio is unappealing.