On-Chain Analysis of Bitcoin (BTC) – Beginning of a New Era?

BTC staggered on the $ 30,000

The price of Bitcoin (BTC) oscillates in a price range between $ 28,000 and $ 30,000. The stabilization of this market, the outcome of which is still uncertain, gives hope to some participants who now claim that the market is suffering.

Figure 1: Daily Price of Bitcoin (BTC)

However, nothing is so certain. Basically, Since its inception, Bitcoin (BTC) has evolved into a quantitative easing environment (QE) as a result of expanded monetary policies and the benefits of huge capital inflows from the traditional financial ecosystem.

This trend now appears to be reversing as Western central banks adopt a quantitative easing (QT) strategy, raising prime rates to curb the inflation they cause.

even though the macroeconomic, geopolitical and energy components of our society are deterioratingThe underlying dynamics influencing the traditional markets and those associated with cryptocurrencies provide us today with an unprecedented context that expands the range of possibilities towards the extremes.

It is a safe bet that the models built by many market analysts in recent years will become invalid in the coming months, as we enter uncharted territory in terms of the global economic and financial context.

This week, we will discuss a broad spectrum of metrics to take a step back in the market and network situation. To do this, we will study:

• long-term investor (LTH) financial position;
• Spot price resolution and realized market price;
• Investor behavior by different geographical areas;

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Long-term investors on the verge

Complementing the assumptions established over the past two weeks, the long – term investor (LTH) metrics describes calm behavior even though a significant portion of the cohort is approaching a decisive point.

Entities with BTC over a period of more than 155 days are statistically more prone to HODLing than their short-term counterparts (STH) and have a high insensitivity to price volatility.

The mass of bitcoins held by this cohort today equals 13.47 million BTC, or 70.74% of the supply circulatedshowing a visible decrease in their holdings of 103,000 BTC since May 8th.

Figure 2: Supply of BTC held by long-term investors

This fall in LTH supply is due to a moderate wave of sales of volume similar to the following events (in orange):

• February 24, 2021: Early exit from the market
• November 03, 2021: Taking Profit at the ATH
• November 25, 2021: Late market issue
• February 1, 2022: Exit from the market on the rebound

Although much effort has been put into the last two weeks, this stress test is not enough to move the cohort as a whole, even if the profitability of their holdings has declined sharply in some participants accumulated since November.

In fact, LTHs hold more than 4 million bitcoins, representing almost a third (29.7%) of their holdings.

Figure 3: BTC supply kept at a loss by long-term investors

This pattern is typical of bear markets, during which long-term investors who have accumulated during sharp corrections are seeing growing unrealized lossessometimes pushing them to part with some of their bitcoins to reduce their exposure to risk.

Here we can see a gradual increase in the supply of LTHs in a lossy position since November 2021, a sign that‘The correction has been purchased by a significant part of the cohort and is now in trouble.

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The market is approaching its full cost base

Let us continue this study by highlighting a significant fact: the spot price of Bitcoin is getting closer and closer to its realization price and signals thata laptop buying opportunity is emerging.

The realized price of BTC (in green) is obtained by dividing the realized capitalization by the total number of coins in circulation and corresponding to the price of BTC when UTXO was created.

It essentially aggregates the price at which each UTXO was last spent. The original component of many on-chain indicators, it shows the basic overall market cost.

Figure 4: Realized Price of Bitcoin

Breaking below this level has historically been a real buying opportunity. In fact, it is the realized price that represents the total market purchase price and the spot price that corresponds to the selling price, when the first falls below the second, the market is in a state of global losses.

Differences in economic participation between East and West

Now, let’s turn to a combination of metrics, recently released by Glassnode, tracking the 30-day cumulative price action during trading hours in the US, Europe and Asia.

These measurements give a an overview of the geography of the up and down market in terms of buying or selling pressuresespecially in response to fundamental changes in market structure.

The graph below shows the monthly price changes recorded in Europe (blue) and the United States (yellow).

Figure 5: Monthly price changes for Europe and the United States

Some significant observations can be drawn from this study:

• Europe comes ahead of buying pressure at the top of March – April 2021;
• US sales are highest in May;
• Then they accumulate heavily on late repayment 2021 and then sell again on the fall January 2022 -20%;
• Recently, Europe and the United States have been at the forefront of the selling pressure during capitalization, bringing the price of BTC to the $ 30,000 level.

Figure 6: Monthly price change for Asia

On the other hand, the Asian market (in purple) behaves relatively independently compared to their Western counterparts.

This time we can look at the following facts:

• Asia participates little in the 2021 bull market and then succumbs to the long July 2021 correction;
• The Orient led the buying pressure at the peak of November 2021 before capitalizing during the correction in early 2022;
• In recent weeks, Asia has been pushing for buying in a modest way.

It emerges from a study of these metrics that In recent years, East and West have taken various decisions, even opposing buying and selling.which we will not fail to follow during our next analyzes to detect potentially meaningful behavioral cues.

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Summary of this chain analysis

In short, Bitcoin (BTC) market is at a crucial pivot pointin terms of its price action and origins.

While long-term investors are beginning to realize small losses, the cohort as a whole does not appear to be ready to begin the distribution of supply accumulated in recent years given current price levels. Conviction and conduct of HODLing LTHs are rigorously tested today and have the potential to influence the market trend in the coming months.

Realized price analysis shows that‘a rare buying opportunity is emergingwhile the context of global macroeconomic uncertainty does not allow us to estimate a rough price target for the bottom of the prospective market to come.

A new set of metrics informs us of the variations in economic participation of different geographies involved in the cryptocurrency market. Recently, it seems that Europe and the US dominate the sales pressure and are capitalizing on and Asian markets are slowly accumulating by leveraging current sales.

Sources – Figures 1 to 6: Glassnode