Bitcoin price analysis by examining the status of the network; Has the power of bears decreased?

Bitcoin price analysis

Bitcoin price analysis by examining the status of the network; Has the power of bears decreased?

As signs of the Bitcoin market rise, data from intra-chain indicators suggest that current massive sales are coming to an end; Reducing sales pressure in the market usually means reducing the power of sellers.

According to the cointelegraph, bitcoin has entered a stabilization phase after falling from $ 42,600 to $ 30,000 on May 19. The digital currency quickly recovered its lost price and was able to regain the $ 40,000 channel, but was unable to record a decisive uptrend above this resistance level and remained below $ 40,000 as of this writing. Is.

Recent Bitcoin price movements can be described as volatile at best, and traders have shown no clear sign of a short-term approach. Some analysts have predicted that if Bitcoin fails to cross the $ 40,000 mark, it is quite likely to fall to $ 20,000 in the coming days.


But a number of in-chain features tell a different story. One of the most interesting things about bitcoin, which is still on the rise, is that long-term bitcoin holders and cumulative addresses have been collecting more bitcoins during the recent price drop.

In addition, an index called the SOPR index indicates that no other bitcoins are sold in the market at a loss.

The SOPR index, which means the rate of return on spent transaction outputs, represents the profit and loss realized over a period of time for all coins transferred in the transfer chain. The entity is also referred to in clusters of addresses as clusters of addresses that have the same volume of bitcoin assets.

Meanwhile, intra-chain data indicate that exchanges saw a decline in their stocks. This suggests that traders were withdrawing and transferring their digital assets to cold wallets or re-depositing them in Defi liquidity pools for greater profit.

Although the short-term outlook may be biased towards sellers, the three intra-chain indicators discussed below show that the price of bitcoin can be in the process of improving.

Bitcoin: Expended Transaction Output Life Index (SOAB)

Bitcoin price correction led to three types of reactions in the cryptocurrencies instant markets. The first was the emotional sell-off by short-term traders, who were likely to sell bitcoins because they had bought at near-limit prices to minimize losses.

The second reaction came from hoodlers who decided to keep their bitcoin balance. They expressed strong belief in the long-term uptrend in bitcoin, which was driven by macroeconomic fundamentally supportive indicators, such as very low interest rates, low government bond yields, fears of inflation and the devaluation of the US dollar, and made cover assets attractive. Bitcoin was considered for long-term storage.

The best way to get rich from bitcoin is boring. It has two quick and easy steps:

  1. Buy
  2. HODL

It really is that simple.

The third reaction was a combination of HODL and aggregation, in the process of which traders used the Bitcoin price drop to buy more of these cryptocurrencies at a “discount.”

The various indicators within the chain indicate a huge difference between the bitcoin reserves of short-term holders and long-term holders during price declines.

For example, the “Bitcoin: Spent Output Age Bands” chart below shows that last week’s coin-to-one-week coin sales were higher. These coins were constantly entering and leaving the market, which is exactly the sign of high price fluctuations in the past week.

Coins that had not been spent for one to three months and three to six months, meanwhile, changed addresses during the recent fall in prices.

The SOAB index is one of the Glassnode criteria that classifies spent coins based on their lifespan (distance to buy-sell) and displays them in colored bands relative to the total number of coins exchanged. Simply put, this chart provides an overview of the long-term holdings of bitcoins.

Another Glassnode metric called “Bitcoin: Total Supply Held by Long-Term Holders” shows that long-term holders are entities that hold Bitcoin for more than six months. They made the most of the coins sold by short-term holders.

Anthony Pompliano, co-founder of Morgan Creek Digital, wrote in a weekly note to customers:

Long-term holders are adding to their investment opportunities, short-term holders are selling, some of those in the short-term category have reached the 155-day threshold and are now in the long-term category.

This divergence indicates long-term stability in the price of Bitcoin, as more and more serious holders of this digital currency have maintained their position in the face of the current macroeconomic crisis.

Reducing bitcoin inventory in exchange offices

Net bitcoin stocks in digital currency exchanges have also fallen over the past seven days, indicating that a much smaller number of traders now intend to sell their bitcoins.

This criterion refers to a common behavior among traders. They only deposit their bitcoins into an exchange wallet when they want to exchange it for Fiat currency or other digital assets. As a result of such behavior, bitcoin reserves on trading platforms increase.

Conversely, the high volume of bitcoins withdrawn from exchanges indicates that traders have decided to keep their bitcoins. This means that Bitcoin will not face immediate selling pressure in the market. This is what the latest Glasnode data shows.

Increasing Bitcoin addresses and cumulative inventories

The total number of cumulative addresses and their wallet inventory is increasing. A cumulative address is an address that has received at least two bitcoin transactions but has never been withdrawn.

The number of these cumulative addresses has increased in the last seven days and 7,430 new wallets have been added to this list.

Another measure called “Bitcoin: Supply Held by Entities with Balance 0.01-0.01” shows that new users are in the process of falling Bitcoin prices. They have entered the network of this digital currency. In addition, the supply held at addresses with between 0.001 and 1 bitcoin has grown steadily, indicating that small investor interest in bitcoin has grown steadily.

Bitcoin price analysis by examining the status of the network; Has the power of bears decreased?

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