Bitcoin’s record volatility has been scrutinized, and while traders are anticipating a potential breakout in price, the October 26 BTC price move toward $21,000 has not yet been shown as confirmation that the $20,000 has come as support.
In a recent edition of The Week On-chain Newsletter, Glassnode analysts defined a bullish and a bearish scenario for BTC.
According to the report, the downside scenario on the blockchain includes limited transaction activity, stagnant growth in non-zero addresses, and reduced miner profits, creating a significant risk for bitcoin selloffs, but the data also shows that long-term holders are more decisive. than ever to overcome the current bear market.
The bullish scenario, meanwhile, involves an increase in the number of whale wallets, a move away from centralized exchanges and hodling by long-term investors.
Stagnant growth of new addresses
The growth of active on-chain addresses remains stagnant on the BTC network. A decrease in transactions translates into less usage and growth of network users, factors that could hinder BTC’s price expansion.
New addresses in the Bitcoin ecosystem that also have a non-zero address have reached a flat level, a trend that also occurred in November 2018. The stagnant growth of new non-zero addresses in 2018 came with a fall in the price of bitcoin, and it was. was not picked up until January 2019, when this metric started to rise.
Also read: Exchange-listed bitcoin miner hashrate is booming, but is it really bearish on BTC price?
A sell-off by miners could trigger another liquidation
In previous years, many BTC miners kept large amounts of BTC in their reserves. However, since the inception of the bearer market, many miners have been selling BTC to cover their investment costs and operating costs.
With BTC mining production costs rising amid falling revenues, miners are deleveraging by selling their newly mined BTC. Glassnode warned about the current situation:
“Distribution in thin order books, historically weak demand, and continued macroeconomic uncertainty and liquidity constraints could lead to miner deleveraging events. “.
As the price of BTC falls and the profitability of miners decreases, miners may be forced to liquidate more of their bitcoin reserves.
Whales accumulate BTC
Despite falling BTC prices, many whales holding more than 10,000 BTC could increase their holdings, even in bear market conditions. As the chart below shows, they continue to accumulate BTC after being distributed in April and September.
BTC withdrawals from centralized exchanges may reduce selling pressure
Funds withdrawn from centralized exchanges reduce immediate selling pressure in the market. Coinbase, one of the highest volume centralized exchanges, is seeing large amounts of BTC withdrawals. Comparing Coinbase’s current BTC outflow to the exchange’s post-March 2020 peak, over 48% of the exchange’s total BTC has moved out.
“There was a very large scale net outflow of -41,600 BTC this week at Coinbase … It is important to note that these outflows are based on our best estimates of portfolio consolidation, and it seems that they are a mix of BTC flowing through both investor portfolios. , and/or institutional grade custodial solutions. »
The owners continue to hold onto their holdings
According to the Realized Cap HODL Waves metric, the total value of USD wealth held in BTC, valued at the time of every last BTC transaction, is now disproportionate to long-term holders. The proportion of wealth held by BTC that has moved over the past three months has never been lower. The reciprocal observation is that the wealth held by BTC for over 3 months (by Hodlers keeps increasing) is at an all time high.
Although some bitcoin analysts believe that BTC’s low volatility during this period corresponds to a “calm before the storm”, the current macroeconomic and BTC price rise may show that the hodlers’ decision is the winning factor.
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