Bitcoin ‘sell the rally’ indicator flashes again as BTC price breaks below $45K

August 12, 2021 Coin Telegraph

Bitcoin

An on-chain indicator, notorious for spotting fake bullish breakouts during downside corrections, flashes again.

A Bitcoin (BTC) on-chain indicator that spotted dead cat bounces during the yesteryear bearish market corrections has flashed again in August 2021.

Dubbed as "Bitcoin: Short Term Holder NUPL," the indicator takes into account the unspent transaction output, or UTXO, of BTC transactions not more than 155 days old. In doing so, it attempts to determine whether or not an investor is profitable within 155 days of purchasing and holding Bitcoin.

Therefore, if the NUPL, which stands for Net Unrealized Profit/Loss, returns a reading below zero, it means investors are making a loss on their Bitcoin investments. Conversely, an NUPL above zero shows that investors are making a profit.

Glassnode reported Thursday that the Bitcoin NUPL for short-term investors recovered back above zero, signifying their profitable state for the first time since May 2021's crypto market crash. Meanwhile, the blockchain analytics platform also signaled fears of potential sell-off, citing fractals from 2014-15, 2018, and March 2020 bear cycles.

*Bitcoin short-term holder NUPL chart. Source: Glassnode*

In detail, short-term Bitcoin holders earlier used the recovery rallies during corrections to secure interim profits.

The price action from 2014-15 bearish session shows BTC/USD resuming its downside correction despite a 100% rebound. Similarly, in 2018, a 97.41% upside retracement did little in securing the market from the prevailing bearish bias.

*Bitcoin price recoveries did not last during the 2014-15 and 2018 bearish cycles. Source: TradingView.com*

The latest upside recovery in 2021 came after Bitcoin prices crashed from circa $65,000 to around $29,000. The cryptocurrency rallied to $46,787 on the Bitstamp exchange following a major rebound afterward—a 63.59% jump.

Bitcoin corrected lower again on Thursday, falling below its psychological support level of $45,000. At its intraday low, the cryptocurrency was changing hands for $44,100.

*BTC/USD price performance in recent history. Source: TradingView.com*

The dissenting bullish case

Glassnode noted that such "rapid recoveries" are common in two cases: either bear market relief rallies or disbelief phases of bull markets.

Therefore, in saying so, the blockchain analytics platform did not rule out the possibility of an extended bull run, such as the one seen during the upside booms of 2013, 2019, and 2020.

More evidence corroborating the bullish outlook came from Glassnode's report published earlier this week. The platform spotted a decline in short-term holders in line with a rise in long-term holders, insomuch that the Bitcoin supply held by long-term holders reached a new all-time high of 82.68% of all the coins in circulation.

Meanwhile, the coin possessed by short-term holders dropped to 25% of the net Bitcoin supply in ciculation, suggesting a run-up in holding behavior.

*Long and short term holder supply ratio. Source: Glassnode*

Historically, when the short-term holder ratio drops to 20%, it leads to a supply squeeze scenario, i.e., when coins in circulation fall short of the current demand.

“This is extremely similar to the volume of coins held by [long term holders] in October 2020 before the primary bullish impulse started,” Glassnode analysts wrote, adding:

"Whilst the supply squeeze based on the [short-term holder] Supply Ratio is not yet at 20%, there are numerous indicators and trends in play that suggest it may hit it in mid-September (but that the conditions for a supply squeeze are already in play)."

Bitcoin was trading around $44,200 at the time of this writing.

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 involves risk, you should conduct your own research when making a decision.

Large hodlers accumulate Bitcoin below $50K as BTC transactions over $1M soar

August 10, 2021 Coin Telegraph

Bitcoin

The dominance of Bitcoin transactions of values above $1 million has doubled year-over-year, hinting at a rising institutional involvement in the cryptocurrency space.

Institutions have not left the Bitcoin (BTC) market even in the face of a 50%-plus bearish correction earlier this year, shows data provided by Glassnode.

The blockchain analytics platform reported on Monday that the dominance of Bitcoin transactions exceeding $1 million has surged twofold since September 2020 — from 30% to 70% of the total value transferred.

Since retail investors do not typically engage in large-volume transactions, Glassnode guesses that the institutional investors might have been behind the spike in the $1 million–$10 million transaction group.

Moreover, the platform noted that the Bitcoin network processed the said bulky transactions as the BTC/USD exchange rate traded lower from $65,000 to below $30,000 in the second quarter of 2021.

*Bitcoin transfer volume breakdown of transactions above $1 million. Source: Glassnode*

“As the market traded down to the lows of $29k in late July, the $1M to $10M transaction group spiked markedly, increasing dominance by 20%,” wrote Glassnode in a report from Monday.

“This suggests that these large-size transactions are more likely to be accumulators than sellers and is again, fairly constructive for price.”

Small transactions lose dominance

Glassnode provided additional volume data that showed a structural decline in small-size transaction dominance.

In detail, transactions of less than $1 million fell by half — from 70% in September 2020 to 30%–40% dominance in March–May 2021. The declines suggest that small investors capitulated their Bitcoin holdings to secure early profits.

During the mid-May crypto market crash, the dominance fell to nearly 20% but recovered back to the 30%–40% range as Bitcoin’s price consolidated above the $30,000 support level. It remained within the said percentage range during the recent run-up to levels above $46,000.

*Bitcoin transfer volume breakdown of transactions below $1 million. Source: Glassnode*

“[The data] clearly demonstrates a new era of institutional and high net worth capital is flowing through the Bitcoin network since 2020,” Glassnode asserted.

Hodl sentiment returns

More evidence of Bitcoin accumulation came from Glassnode metrics that tracked the hodling behavior of investors.

The “Long and Short Term Holder Supply Ratios” indicator reported that the Bitcoin supply owned by long-term holders (LTH) reached an all-time high of 82.68%. Meanwhile, the short-term holders (STH) supply continued to decline, hitting 20% and suggesting holding and coin maturation in play.

*Bitcoin long and short term holder supply ratios. Source: Glassnode*

Glassnode suggested that when the STH supply ratio reaches 20%, it follows with a major supply squeeze — i.e., a supply shortage that typically drives the underlying asset’s prices higher.

But who will accumulate the remaining 5% of the adjusted supply? A Glassnode metric suggests coins aged between one week and three months represent a large portion of the liquid supply.

*Bitcoin HODL waves for coins aged between 1 week and 3 months. Source: Glassnode*

“We can see that after the uptrend in Q1 (old coin distribution), these age brackets have fallen back to bear market equilibrium level of around 12.5% to 15% of supply,” wrote Glassnode, citing the chart above.

“This downtrend indicates that coin maturation is indeed in play, and that many of the 2021 bull market buyers have stuck around to become strong hand HODLers.”

Bitcoin was trading at $45,930 at the time of writing, down 0.73% from its intraday high.

No, Bitcoin isn’t entering a 2018-like bear cycle, new data suggests as BTC targets $45K

August 9, 2021 Coin Telegraph

<div>No, Bitcoin isn't entering a 2018-like bear cycle, new data suggests as BTC targets K</div>

2018 Crypto Crash

Even as Bitcoin trades almost 35% below its previous record high of about $65,000, long-term investors have not contributed actively to its decline.

The scale of Bitcoin's (BTC) ongoing downside correction might not be as alarming as it was in 2018, indicates data shared by Glassnode.

The blockchain analytics firm reported that investors who have held Bitcoin for more than one year showed a lesser interest in liquidating their investments versus those who held the digital asset for 3-6 months. Its dataset covered the period of Bitcoin's correction from circa $65,000 on April 14 to around $44,000 on Aug. 9.

*Bitcoin spent output age bands. Source: Glassnode*

On the other hand, all investor cohorts were instrumental in crashing the BTC price in 2018 from $19,891 to $3,128.

With a majority of "old coins" not deciding to secure their 275% year-over-year profits even after a 35% downside correction, Glassnode data hinted strong "hodling behavior" that might have Bitcoin escape a 2018-like mass capitulation event.

Glassnode noted:

"Despite a strong rally to $45k, the Bitcoin market still has not seen a significant increase in old coins (>1y) being spent. This is very different to the 2018 bear market where old hands took exit liquidity on most relief rallies."

Panic selling missing

Excessive valuations led by the initial coin offering (ICO) frenzy were the main cause behind the 2018 cryptocurrency market crash. Random startups raised billions of dollars to build blockchain platforms, but a majority of them turned out to be either vaporware or scams in the end.

When the bubble finally popped, the cryptocurrency market ended up crashing from $700 billion in January 2018 to $102bn in December 2018. As a result, Bitcoin—which was one of the currencies of choice during startup fundraisers—fell 85.27% from its then-record high of $19,891.

*Bitcoin performance during 2018 crypto bubble burst. Source: TradingView.com*

Nevertheless, 2021's Bitcoin price rally originated from solid macroeconomic grounds as investors hunted for safe havens against loose monetary policies implemented by central banks worldwide. As a result, central banks' efforts to guard economies against the financial aftermath of the coronavirus pandemic, pushed the global debt to over $281 trillion last year.

That was 355% of the global gross-to-domestic product (GDP). According to the Institute of International Finance, the borrowing expects to increase by another $10tn in 2021.

Global public debt rises to all-time high in 2020. Source: Institute of International Finance

"People have less wealth and more debt. The devaluation of fiat currencies has made everything more expensive around us," said Anthony Pompliano, partner at Pomp Investments, in a note to clients, adding:

"Bitcoin promises that we will usher in a new era of sound money. The currency is outside the system. No one controls it. People will once again be able to save their way to financial freedom. [Moreover], the money won’t lose value over time. [Instead], the purchasing power will increase."

Short-term investors returning?

Bitcoin's recent rebound from below $30,000 to over $45,000 also coincided with a modest spike in the percentage of investors that last bought the digital asset 3-6 months ago.

*Bitcoin unspent transaction output heat map. Source: Glassnode*

On July 19, when Bitcoin was wobbling near $30,000, the cryptocurrency's net unspent transaction output for 3M-6M investors was 12.84%. That surged to 13.44% on Aug. 9. Bitcoin was trading around $45,130 on the same day, showcasing that weak hands were turning strong.

Bitcoin HODL