In early February, the cryptocurrency market performed well with many altcoins rising above the 2-year descending trend lines and surpassing the 200-day MA with a staggering increase that brought investors returns. double and triple almost daily.
On February 13, Bitcoin traded at $ 10,500 and bull-backed analysts predicted that the $ 11,000 and $ 11,500 resistance levels would be wiped out, opening the door for a quick return. 12K dollar area. Even if the price of Bitcoin was rejected at $ 10,400 and pulled back to $ 9,500, investor sentiment continued to rise as many analysts believed retesting the $ 9,400 level was inevitable.
All this changed when the Corona virus broke out. Known by the official name COVID-19, the virus has been appearing in major newspapers since the end of December 2019. But over the past two weeks, fear has spread to global markets and investors have begun to think about the worst-case scenario affecting economic productivity.
The global market and cryptocurrency prices plunged last week, wiping out $ 3.6 trillion in value from the stock market and $ 48 billion from the crypto market. The price of Bitcoin dropped $ 1,500 after just a week and analysts are now concerned that the leading digital assets could return to the $ 7K zone if the global market continues to turn bad.
What does on-chain activity say about Bitcoin?
Investors who use the standard basis of technical analysis may have applied the bearish view to Bitcoin in the short term. But what does Bitcoin on-chain activity say about the current situation?
To get a better understanding of this, let's see what Glassnode co-founder Jan Happel has to say about a range of blockchain metrics and give investors advice on the current and future Bitcoin price situation.
Jan Happel (JH): In general, the psychology of long-term Bitcoin investors seems to be very positive right now. Bitcoin ASOL (Average output life) is a metric that shows the average age (in days) of spent transactions.
As long as ASOL stays low, we don't have to worry about long-term holders trying to move and sell coins. The weeks of this spike will be alarming and only appear during previous big sell-offs.
ASOL Bitcoin | Source: glassnode.com
Ask: So what happened when the big press release and a big price cut last week? Are Bitcoin investors leaving the market?
JH: Not necessarily, the HODL Bitcoin wave chart shows that the number of Bitcoin that has not moved for more than 2 years is still increasing. It is a sign affirming many HODL investors since more than a year ago.
Bitcoin HODL wave Source: glassnode.com
Moreover, unrealized profits are at a good level and there is no sign the market has reached its peak right now. Historically, this indicator captures the top and the market is highly priced correctly. Currently, it is at the same level as the beginning of previous bull markets.
Unrealized profits of Bitcoin | Source: glassnode.com
Ask: Throughout the end of 2018 and much of 2019, the media reported almost weekly that the various aspects of the Bitcoin network reached new all-time highs. What does on-chain data tell us about actual activity on the Bitcoin network?
JH: Network activity and growth are recovering from last year. For example, the number of transactions adjusted by the entity is tending to increase again. This is essentially the total number of transactions between different entities but does not include transactions that occur in the addresses of the same entity.
The number of addresses with non-zero balances is also reaching new all-time highs every week.
Bitcoin address has a balance other than 0 | Source: glassnode.com
Our R&D team recently found that more than 75% of the on-chain Bitcoin volume has not changed. In fact, recent reports say:
“Without a doubt, on-chain data is high but inaccurate, not good enough. It contains significant amount of noise and is carefully pre-treated. Therefore, it is necessary to filter out useful information ”.
You can see the price of Bitcoin here.
Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
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