Bitcoin Network Expects New Bullish Activity, New Study Shows

Recent data from Glassnode suggests that buyers could soon dominate the Bitcoin market. According to the insights, the market could move into a capitulation event that involves significant selling activity. The occurrence of a capitulation event, therefore, shows that sellers may exit the market as buyers become more active.

Lower Short-term Accumulation 

In a bid to determine Bitcoin’s future trend, Glassnode’s insight sought to examine the market behavior of buyers and sellers. The digital asset is currently at a sensitive stage, trying to consolidate its prices. From the data, it is evident that there is a decreasing short-term accumulation activity. The metric showed a higher accumulation rate between October 2021 and January 2022. Since then, the accumulation trend has become unstable due to the ongoing global tensions. More investors are also using their old coins stored in inactive digital wallets. The insight was made possible through coin-day, a mechanism that measures the average period coins remained idle. Coins that exceed the 6-month threshold, therefore, made up 5% of the total spending volume.

A Decreasing Short-term Supply

Short-term holders (STH) represent investors who can retain their holdings within a 155-day timeframe. This category of investors has a higher chance of selling digital coins when the market is unstable. Glassnode’s report explains that there is a lower coin supply amidst the STH investors. What’s more, 82% of STH users are holding their assets at a loss-making the STH supply to register an all-time low. Such an instance is a major contributor to bearish momentums in the market since investors will sell their holdings to avoid losses. HODLing remains the most favourable investment choice for users. However, HODL indicators show that coins with less than a 6-month holding period are displaying all-time lows. Assets younger than six months represented 24.53% of the current supply, while the remaining inactive coins represented 75.47%.

Additional Insights

The report further explains there is an increasing long-term demand for the dominant cryptocurrency. Under this section, investors are positive that the digital asset’s value may increase moving forward. As such, the insight set out to uncover the signs of a long-term demand activity. From the data, Coinbase exchange shows a huge net outflow which adds up to 31,130 BTCs. The figure is equivalent to $1.1B, going by the asset’s value. Massive outflows have led to a reduction in the amount of BTCs available on Coinbase. Investors also leverage dormant digital wallets to store coins gathered from the exchange outflows. In fact, the data reports that the amount of digital currencies found in these inactive wallets are bigger than the liquid wallets. The market inflation rate is yet another indicator that Glassnode applied to determine the accumulation rate of long-term holders (LTH) on an annual basis. Based on the indicator, long-term holders are gathering 15% of the total supply every year. This action is visible when the market is going through a bearish phase. The accumulation rate further reveals that LTH investors assemble more coins than the issuance level.