The research detailed Bitcoin’s recent record low volatility and while traders await an eventual price breakout, the October 26 BTC price move to $21,000 is yet to be interpreted as confirmation that $20,000 has now become support.
Glassnode analysts mapped a bull and bear case for BTC in a recent “The Week On-chain Bulletin”.
According to the report, the bear situation includes limited on-chain transaction activity, stagnant non-zero address growth and declining miner profits presenting a strong Bitcoin sell risk, but the data also shows long-term buyers are more determined than ever before. weather of the current bear market.
The bullish situation is causing a surge in whale wallets, exits from centralized exchanges and hodling of long-term investors.
Stopped new address growth
On-chain active address growth remains stagnant across the BTC network. A decrease in transactions leads to a decrease in usage and user growth for the network, factors that can hinder BTC price growth.
New addresses with a non-zero address in the Bitcoin ecosystem also plateaued, a trend that also occurred in November 2018. The stagnating growth in new non-zero addresses in 2018 was followed by a BTC price drop that hadn’t recovered until then. January 2019 when this metric started to increase.
Related: The hash rate of public Bitcoin miners is increasing, but is it really a drop for the BTC price?
Miner sale may trigger a new sale
In previous years, many BTC miners held large amounts of BTC in their reserves. However, since the beginning of the bear market, many miners have been selling BTC to cover their capital costs and operating expenses.
As BTC mining production costs rise against the backdrop of falling revenues, miners are removing their debt by selling their newly mined BTC. Glassnode warned:
“Events that reduce the leverage of miners can lead to weak order books, historically light demand, and persistent macroeconomic uncertainty and liquidity constraints.”
As the price of BTC drops and miners’ profitability decreases, miners may have to liquidate more of their reserve Bitcoin holdings.
Whales are accumulating
Despite falling BTC prices, many BTC whales exceeding 10,000 BTC are increasing their holdings even during bear market conditions. As the chart below shows, they continue to accumulate BTC after they are distributed in April and September.
Withdrawal of BTC from the centralized exchange can reduce selling pressure
Funds moved from centralized exchanges weaken the sudden selling pressure in the market. Coinbase, one of the highest volume centralized exchanges, is seeing massive withdrawals of BTC. When comparing the current BTC outflow from Coinbase to the post-March 2020 peak on the exchange, over 48% of the total BTC on the exchange was transferred.
Glassnode states:
“Coinbase has seen a massive net withdrawal of -41.6k BTC this week. […] It is important to note that these outlets are based on our best predicted clusters of wallets and appear to be a combination of coins flowing into both investor wallets and institutional-grade custody solutions.”
Hodlers keep grumbling
According to the Realized Cap HODL Waves metric, the total USD wealth held in BTC, valued during the last trade of each coin, is now disproportionately directed towards long-term holders. The rate of wealth held in coins that have moved in the past three months is now at an all-time low. The reciprocal observation is that the wealth (held by more and more hodlers) by coins older than three months is currently at an all-time high.
Some Bitcoin analysts believe that BTC’s low volatility during this period is a “calm before the storm” and that BTC’s current macroeconomic and price surge may indicate hodlers’ determination as the winning factor.
The views and opinions expressed here are those of the author alone and may not necessarily reflect those of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.
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