Cryptocurrency News

3 On-Chain Indicators Reveal That Bitcoin Price Selling Is Losing Steam


Bitcoin (B T c) entered a consolidation phase after crashing from $42,600 to $30,000 on Coinbase on May 19. The flagship cryptocurrency quickly recovered its losses and reclaimed $40,000, but it failed to register a clear bullish breakout above this resistance and the price remained well below $40,000 at the time of writing.

The latest price action in the bitcoin market – at best – has been choppy, with traders showing no clear signs of their short-term bias. Some analyst Predicted That if the price of BTC / USD does not break above $ 40,000, it could fall to a very low $ 20,000 in the coming seasons.

Interestingly, a handful of on-chain indicators tell a different story. One of the most interesting topics that maintains the bitcoin boom bias is looking at long-term holders and accumulation addresses stacking more btc During the recent price drop.

In addition, a metric known as bitcoin entity-adjusted SOPR (spent output profit ratio) shows that the market is no longer selling bitcoins at a total loss.

Bitcoin unit-adjusted SOPR. Source: Glassnode

Meanwhile, on-chain data shows exchanges saw their reserves plummet, a sign that traders are withdrawing their digital assets to cold wallets or depositing them into DeFi liquidity pools for more attractive returns. Huh.

While the short-term outlook may be skewed towards the bears, the following three on-chain indicators suggest that Bitcoin may be in the process of breaking out of the bottom.

bitcoin: spent output age band

The correction in the price of bitcoin resulted in three reactions in the spot market. The first involved panic-selling by short-term traders, who sold bitcoin to reduce their losses, perhaps because they had bought a cryptocurrency near its top.

The second response involved HODLER who decided to opt out of their bitcoin supply. He showed long-term confidence in bitcoin’s rapid bias Supporting Macroeconomic Fundamentals, such as ultra-low interest rates, poor yields on government bonds, fears of inflation and a depreciating US dollar, which made hedging assets such as bitcoin attractive to HODLs.

The third reaction was a mix of HODLers and accumulators as traders used the drop in the price of bitcoin to buy more cryptocurrencies at a ‘discount’.

Various on-chain metrics showed a large gap between the bitcoin reserves held by short-term holders and long-term holders during price crashes.

For example, in the ‘Bitcoin: Spent Out Edge Bands’ chart below, last week saw more sales than old coins from day one to week. These coins continued to move in and out of the market, accurately reflecting the high price volatility conditions in the market over the past week.

Bitcoin spent output age bands, which are calculated per seven-day moving average. Source: Glassnode

Meanwhile, coins that were not spent for 1 to 3 months and 3 to 6 months also changed addresses in the wake of the recent price crash.

Traders who held bitcoins in a wallet for 1–6 months moved them in May. Source: Glassnode

Another Glassnode metric called ‘Bitcoin: Total Supply Held by Long-Term Holders’ showed that long-term holders – entities holding bitcoins for more than six months, were the biggest beneficiaries of tokens sold by short-term holders. became.

The supply of bitcoins kept by long-term holders continued to rise amid the May crash. Source: Glassnode

In a weekly note to clients, Pomp Investments investor Anthony Pompliano said:

“Long-term holders are increasing their positions, short-term holders are selling, some entities in the short-term group have now reached the 155-day range for this metric and are now in the long-term group.”

This divergence points to a long-term stability in the price of bitcoin as more and more serious holders take positions against the ongoing macroeconomic crisis.

Bitcoin balance drops on exchanges

It is also in the net bitcoin reserves held by cryptocurrency exchanges. declined in the last seven days, indicating that fewer and fewer traders are now looking to sell their bitcoin holdings.

The metric points to a specific trading behavior. Traders deposit bitcoins in their exchange wallet only when they want to either sell them for fiat currency or trade them for other digital assets. As a result, BTC reserves increase on the trading platform.

Exchange bitcoin reserves are down 14,207 BTC over the past 7 days. Source: Glassnode

Conversely, a high degree of BTC withdrawals reflect traders’ decision to hold the cryptocurrency. This means that bitcoin will not have to face immediate selling pressure in the spot market, which shows the latest Glasnod reading.

Increase in bitcoin accumulation address and balance

The total number of accumulation addresses and balances in these wallets is increasing. In retrospect, an accumulation address is one that has received at least two BTC transactions but has never moved assets out of the address.

Convinced bitcoin bulls continue to pile up through price declines, source: GlassNode.

Over the past seven days, the number of these storage addresses has increased, adding 7,430 new wallets to the list.

Another metric called ‘Bitcoin: Supply Held by Entities with Balance 0.01 – 0.1’ showed that new users entered the bitcoin network during its price decline. Additionally, the supply held by addresses ranging from 0.001 BTC to 1 BTC has increased, indicating a steady increase in retail interest.

Bitcoin supply by wallet holding 0.01-0.1 BTC spikes as prices fall. Source: Glassnode