The flattening of the depletion of spot reserves shows that, attracted by recent price increases, retail investors are buying in large quantities.
Original title: “Glassnode 丨 BTC’s liquidity crisis continues? 》
Written by: LIESL EICHHOLZ
Translation: Sherrie
Entering the first week of 2021, Bitcoin continued to hit a record high, surpassing $30,000, and continued to climb. But ETH is the real winner this week, with a single-day increase of more than 37%.
Bitcoin market health
Bitcoin spent another impressive week during the New Year, reaching an all-time high, breaking through $30,000 for the first time. The opening price this week was 26,270 US dollars, and then continued to rise, reaching a high of 34,550 US dollars, and then fell slightly, closing at 32,685 US dollars this week.
Bull market
As the price of Bitcoin continues to rise, a large number of retail investors are also becoming more interested in Bitcoin. The number of addresses holding non-zero Bitcoins has reached a record high, exceeding 33 million .
However, despite news reports and retail investors’ interest in Bitcoin is growing rapidly, the number of new Bitcoin addresses per day has not yet reached the 2017 level . The steady and sustained growth of this indicator (as opposed to the sudden peak in the last big bull market) shows that the application of Bitcoin is experiencing strong organic growth, but it is not a typical bubble viral growth.
Therefore, these indicators paint an optimistic picture of a market characterized by healthy and sustainable growth (rather than hype).
Upbeat comments from Willy Woo
Willy Woo’s point of view: In the long run, the structure of foreign exchange reserves indicates that the next year will be a good year.
The depletion of reserves on spot exchanges has ceased, which means that the re-accumulation phase of the macro cycle may be over. The chart below shows our position in the overall macro cycle through the perspective of spot reserves.
What caused the reserves to increase in the later stages of the bull market? Retail investors tend to store their cryptocurrency on exchanges, which will lead to an increase in net reserves. This is the main stage of the bull market. Since we already know that institutions are buying in large quantities, the flattening of the depletion of spot reserves shows that, attracted by recent price increases, retail investors are buying in large quantities .
Features of altcoins: ETH bull market
In the bull market on Sunday, ETH rose by more than 37% in a single day, breaking through the $1,000 mark, up nearly 7,500% compared to the same period last year, when the price was less than $140.
The last time ETH reached this price was 3 years ago, in January 2018, when it took less than a month to be above $1,000, and then fell back to triple digits. However, on-chain signals indicate that we are still in the early stages of the bull market relative to the price level in 2018 .
For example, its MVRV ratio (indicating when the asset may be overvalued) is still very low compared to the beginning of 2018, when the price was comparable to current levels.
When MVRV was at such a low level before the 2017 bull market, ETH was still below $25 and experienced a sharp rise of 58,000% until it reached a historical high. This shows that in the current market, ETH has room for further substantial growth before it is overvalued.
Weekly feature: Bitcoin’s liquidity crisis continues
As investors continue to hoard and hold Bitcoin, the liquidity of Bitcoin is constantly being squeezed, and the available supply is getting less and less.
Throughout 2020, the liquidity category of Bitcoin’s “illiquid supply” is getting larger and larger, while liquidity and high liquidity supply are decreasing.
This is a very optimistic signal, because scarcity leads to an increase in demand relative to supply , pushing up prices. This chart also shows that the current influx of retail investors is more likely to hold rather than realize income, which indicates that both retail and institutional investors have more room for growth.
