Research has detailed Bitcoin’s recent record-low volatility, and while traders expect an eventual price breakout, BTC’s October 26 price move to $21,000 is not yet interpreted as confirmation that $20,000 has now become support.
In a recent “The Week On-chain Newsletter,” Glassnode analysts mapped out a bull case and a bear case for BTC.
According to the report, the bear case includes limited on-chain transaction activity, stagnant non-zero address growth and diminished mining profits that pose a strong Bitcoin selloff risk, but data also shows that long-term hodlers are more determined than ever to face the current bear market. to endure.
The bull case, on the other hand, entails an increase in whale portfolios, outflows from centralized exchanges and hodling by long-term investors.
Growth of new addresses stalled
The growth of active addresses in the chain continues to stagnate throughout the BTC network. A reduction in transactions translates into a decrease in usage and user growth for the network, factors that could potentially hinder BTC’s price expansion.
Bitcoin transactions from active addresses versus the price of Bitcoin. Source: Glassnode
New addresses within the Bitcoin ecosystem that have a non-zero address have also plateaued, a trend that continued in November 2018. The stalled growth of new non-zero addresses in 2018 was followed by a BTC price decline that only recovered in January 2019, when this metric started to rise.
New Non-Zero Bitcoin Wallets. Source: Glassnode
Related: Public Bitcoin Miners Hash Rate Is Booming, But Is It Actually Bearish For BTC Price?
Sales to miners may trigger another sale
In previous years, many BTC miners had large amounts of BTC in their reserves. Since the onset of the bear market, many miners have been selling BTC to cover their capital costs and operational costs.
With the production costs of BTC mining rising against a backdrop of declining revenues, miners are reducing debt by selling their newly mined BTC. Glassnode warned:
“Miner deleveraging events can lead to distribution in thin order books, historically weak demand and lingering macroeconomic uncertainty and liquidity constraints.”
As the price of BTC falls and miners’ profitability shrinks, miners may be forced to liquidate more of their reserve Bitcoin holdings.
Bitcoin balance in mining wallets. Source: GlassnodeWhales pile up
Despite falling BTC prices, many BTC whales crossing 10,000 BTC may be increasing their holdings even in bear market conditions. As can be seen in the chart below, they continue to accumulate BTC after its distribution in April and September.
Bitcoin accumulation trend chart. Source: GlassnodeBTC Withdrawals From Centralized Exchange May Ease Selling Pressure
Funds moved away from centralized exchanges weaken the immediate selling pressure in the market. Coinbase, one of the most centralized exchanges, is seeing large amounts of BTC withdrawals. When comparing Coinbase’s current BTC outflow to the post-March 2020 peak on the exchange, more than 48% of the total BTC on the exchange has been transferred.
Glassnode points out:
Coinbase has seen a very large-scale net withdrawal of -41.6k BTC this week. […] It is important to note that this outflow is based on our best estimated wallet clusters and appears to be a combination of coins flowing into both investor wallets and institutional custodial solutions.”
Bitcoin balance on Coinbase. Source: GlassnodeHodlers keep on hodling
According to the Realized Cap HODL Waves statistic, total USD assets in BTC, valued at the time of each coin’s last trade, is now disproportionately skewed for longer-term holders. The share of coin wealth that has moved in the past three months is now at an all-time low. The mutual observation is that the wealth held by coins older than three months (still held by hodlers) has now reached an all-time high.
Bitcoin HODL waves. Source: Glassnode
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 demonstrate the determination of hodlers as the winning factor.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move carries risks, you should do your own research when making a decision.