Bitcoin: On-chain Indicators Suggest Market Recovery in Progress
The Bitcoin market surged above $30,000 and achieved the highest quarterly returns, but soon afterward lost its recent gains.
This report is based on Glassnode’s recent on-chain data.
Last week’s returns have also reached +36%, making Bitcoin the leading asset class in terms of performance so far this year, before dropping by 9%. This impressive market performance starkly contrasts with 2022, indicating a positive market direction shift.
Over the past year, the relationship between BTC prices and Gold considered a traditional safe haven for sound money, has been a notable change. The correlation between these two assets has become increasingly positive over the past 30, 90, and 365 days, and this trend has persisted even during the recent US banking crisis.
This indicates that investors are becoming more aware of the importance of sound money and the potential risks associated with counterparties.
Long/Short term holders
The current state of the Bitcoin market presents an intriguing scenario. Interestingly, our Long/Short-Term Holder threshold of 155 days coincides with the time of FTX’s collapse. This means that we can analyze the LTH and STH metrics in the following manner:
🟦 Long-Term Holders have a total supply balance of 14.161M BTC, close to a new all-time high. These holders acquired their coins before the FTX crash.
🟥 Short-Term Holders have a supply balance of 2.914M BTC that has remained fairly stable in 2023. These holders obtained their coins after FTX’s collapse.
If we examine the distribution of investor acquisition prices, we can observe three significant supply clusters as follows:
- Bottom Formation Cluster < $25k: This Cluster mainly comprises coins that were exchanged between June 2022 and Jan 2023. The buyers in this range are a mix of LTH (pre-FTX) and STH (post-FTX) investors, and the supply is relatively balanced.
- Recent Acquisition $25k to $30k: These coins represent 7.25% of the total supply and are predominantly STH coins. This is due to a combination of profit-taking from lower prices and selling to breakout buyers when the price surged above $25k.
- Cycle Survivors $30k+: This Cluster contains Long-Term Holders who held on during the volatility and uncertainty of the 2021-22 cycle. They still have their coins and make up 22.2% of the total supply.
Holdings of Long-term Bitcoin Investors
Although Bitcoin prices have almost double since the lows of Q4 2022, there has been no significant increase in spending of older coins. According to the chart below, coins younger than three months still make up less than 20% of the total Bitcoin holdings, typically observed during bear cycle lows.
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In contrast, this means that coins that are older than three months, also known as HODLers, own more than 80% of the wealth, despite the market’s downturn in 2022 and its upswing in 2023.
These two observations can be illustrated through the RHODL ratio, which is currently in the process of reversing from the point of peak HODLer saturation. Based on this metric, the market cycle is likely turning in favor of the bulls, but it is no longer undervalued (nor is it overvalued by historical standards).
The fact that 65.8% of all trading days have recorded a higher RHODL ratio provides further evidence that HODLers continue to dominate the market and supply holdings.
Conclusion
Despite the fact that the cryptocurrency market experiences considerable fluctuations, many on-chain indicators that represent collective human decisions remain fairly consistent.
According to Glassnode’s analysis on the market, several on-chain indicators imply that bear market conditions (or at least the worst of them) may now be in the past.
Bitcoin is currently trading around $28,100 after a significant price decline (-9%) in the past week. On the daily chart BTC is still down 2.6% and has a trading volume of $21.54 billion.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
