Author | LIESL EICHHOLZ
After a rather turbulent week, BTC and other crypto markets seem to be recovering, and Bitcoin rebounded above all-time highs and quickly approached $20,000.
A new week on the chain
We are changing the format of The Week On-Chain and pay more attention to the fundamentals of data provided on the chain. This new format will include more of our readers’ favorite content, while retaining core information, providing actionable market insights about BTC and other popular crypto assets!
Bitcoin market health
Bitcoin and other crypto markets have spent a turbulent week. At the beginning of the week, the price of BTC exceeded $18,600 and then rose to over $19,000. On Thursday, BTC fell sharply on Thursday and found support at $16,500, then slowly rose to end the week at $18,145.
However, as of Monday, BTC quickly approached $20,000 and even briefly broke through the historical high of $19,783.
Bull market
The number of active entities (level 3) on the BTC blockchain has been steadily increasing throughout 2020. The current daily number of active entities is close to 400,000, which is less than 4% from the previous historical high. It only exceeded current levels once during the bull market at the end of 2017.
This increase in on-chain activity means an increase in network adoption and usage. However, unlike the previous round of bull market, the number of new entities (level 3) is still relatively low .
This shows that the current rebound may be more driven by institutional investors than retail investors . Therefore, before retail investors start to enter the market, we can expect more growth in recognition and price.
Bear market
Contrary to this bullish view is the subject-adjusted ASOL (third layer), which shows that the average age of coins being traded is increasing rapidly. Generally speaking, a higher value means that the old coin is being transferred, which may mean that the long-term holder is profitable.
On November 28, the average transaction time of the currency was 43.9 days. The last time the main body adjusted ASOL (Average Spent Output Lifespan) was so high in January 2018, when long-term holders dumped BTC when it fell from a historical high. The recent surge indicates that long-term holders have realized the profits of the past few years, and this analysis is supported by the growth of the Currency Destruction Day (Article 2) and LTH-SOPR (Article 3).
However, this model is different from the bull market in 2017. The surge in ASOL occurred while prices were still rising, not after reaching the peak. It does not necessarily represent a sell-off (or a response to a sell-off, as we saw in 2018). But it does show that long-term holders may be skeptical of the continued price fluctuation above ATH at the beginning of this year .
Willy Woo’s bullish comment
The re-accumulation phase of this bull market coincides with the longest BTC inventory and deepest consumption period in the spot exchange in the 12-year history of BTC.
So far, this consumption has lasted for 10 months, doubling the 5-month span of the previous cycle. Similarly, the proportion of transfers from exchanges into cold wallets was 19%, compared with 11% in the previous cycle. With this in mind, people expect the prospects for 2021 to be very optimistic .
Although the market may need to cool down locally after the strong rebound in November, the long-term market structure is extremely bullish. It is expected that in the next few weeks, Bitcoin will break through its all-time high and start the last bargain buying opportunity before the price discovery phase begins above $20,000.
Once $20,000 has passed, there will be no historical resistance level, allowing the price discovery mechanism to push prices up at a higher rate. Investors should consider fully deploying funds before historical highs.
Altcoin Topic: The end of UNI Staking leads to a drop in the supply of smart contract WBTC
During the period from September 17 to November 17, Uniswap provided liquidity to any of the four ETH-based liquidity pools, providing an opportunity to obtain UNI Token. The largest of these pools is ETH/WBTC, which attracted more than $800 million in liquidity at its peak.
This resulted in a large amount of ETH and WBTC being locked in smart contracts when users UNI Token were mining . But on the day the mining ended, the proportion of the locked-in supply of these two assets had dropped (secondary)-for WBTC, the decline was particularly large.
After the end of UNI mining on November 17, ETH showed a drop of 0.8 points, and the use cases of WBTC were naturally less than the original assets of Ethereum. However, because users withdrew liquidity from Uniswap, this led to a 10% decline in WBTC. A point drop. At the same time, the total liquidity on Uniswap dropped by $1.3 billion-a drop of more than 42% from the previous day.
After the mining, the liquidity on Uniswap was reduced by 1.3 billion USD (source: uniswap.info)
Compared to WBTC, the other assets that support UNI liquidity mining (DAI, USDC, and USDT) have fallen less – but still significant (3.95, 1.45, and 0.63 points, respectively).
It is worth noting that although ETH worth more than 1 billion US dollars is locked in these pools , the price of ETH has not been affected by the return of these currencies to the market, which shows that their owners continue to hold them even after the pledge ends. Have them.
