There has been a significant increase in activity on the Ethereum chain, which indicates that the economic flow on the chain has supported the price increase.
Original title: “Glassnode 丨 Will Bitcoin break through the previous high after consolidation? 》
Written by: checkmate
Translation: Zheng Qirui
Bitcoin prices continued to rise this week, rebounding from a low of $53,333 to an intraday high of $59,454. Prices remain within the “trillion-dollar” range established since the beginning of February.
On-chain signals continue to support strong HODLing demand from miners and long-term holders , as overall spending patterns are still bullish. However, there are also signs that part of the BTC funds is oscillating within the range, while the overall return of Ethereum is higher.
Higher after Bitcoin consolidation
After falling below the $1 trillion market capitalization level (~$53,475) during the recent pullback, the price of the Bitcoin market has risen above the major on-chain support levels . We can see this in the URPD indicator, which is designed to show the volume of transactions in different price zones.
We can think of it as the price level at which BTC changes hands, creating a new cost basis for buyers, and the level of profit and loss for sellers. Since USD 1 trillion, the price region above the USD 1 trillion threshold is the most important chain support, and the market is currently at the high end of this range.
The BTC volume equivalent to 12.1% of the circulating volume (2.93 million BTC) now forms an on-chain support lower than the current price. A small amount of 6.778 million bitcoins (3.63% of the supply) were moved above the current price, which may create resistance.
Tokens held by miners and over-the-counter trading platforms
Throughout April and May, most of the miners have switched to Tuncoin, and the net change in the miner’s balance is green . This indicator is calculated by looking at the net change in the miner’s balance over the past 30 days.
This indicator currently shows that miners are not only accumulating funds on a net basis, but also accumulating funds at an increasing rate, which shows that they have firm belief and optimism.
If we shrink and apply the 14-day moving average (equal to the difficulty adjustment period), we can see that the current miner accumulation rate is actually historical . The current net position change is compared with three instances in the last five years.
At the rate of accumulating 6,000 BTC per month (after the halving), this indicates that the HODL of miners in the same period (900 BTC / day x 30 days = 27k BTC / month) is about 22% of the issuance of block subsidies.
Since miners are usually closely related to over-the-counter trading platforms that distribute cryptocurrencies, we can review the trend of over-the-counter platforms to estimate buying demand from large buyers.
The total balances held by the three OTC service desks we tracked continued to decline throughout 2021, reaching a low of only 6,000 BTC this week. This shows that the demand of larger buyers exceeds the available supply of these OTC desks. In addition, this trend apparently started in December 2020, when there were a large number of miners. This coincides with the strong growth of institutional interest in assets as a macro investment.
HODLing that prompts capital flow
There are many on-chain similarities between the current integration scope and 2020 in the market, and this is a period of accumulation to a large extent . The binary CDD indicator (7-day moving average) shows the trend and consumption behavior of earlier tokens, and provides a proxy estimate of what the smart contract generation is doing.
Summary of the last 12 months:
June to October 2020: Binary CDD trading sideways, indicating that older tokens are generally dormant and are accumulating .
October to December 2020: The binary CDD trend is higher, indicating that older tokens are spent at a higher rate to achieve profits after breaking through the $20,000 ATH .
January to March 2021: With the restoration of confidence and market confidence, the binary CDD trend will decrease, and the old tokens will reduce their spending.
March-May 2021: Binary CDD is trading sideways again, indicating that the old coins are relatively dormant and the market has returned to HODLing and re-accumulation mode .
However, it should be noted that by mid-2020, the transaction price of binary CDD is higher, which indicates that the consumption of old tokens is still taking place.
HODLed or the lost cryptocurrency metric tells a similar story, but it explains more about the current period. This metric measures the estimated supply that has been allocated or lost , and we can see:
In the middle and late 2020s, accumulation and balanced growth are very obvious.
Strong spending at the end of 2020,
Expenditure slowed in early 2021.
These observations are in good agreement with the binary CDD observations above.
However, in the current period (March 2021 to present), this HODLed balance has been trading sideways (not reaching the expected accumulation), and spending is short-lived. Although this confirms that older BTCs are generally dormant and maintain bullish market confidence, the continued accumulation is offset by slightly larger allocations .
If we look at the BTC balances on the two largest exchanges Coinbase and Binance, we can clearly know the whereabouts of these used BTCs.
Coinbase’s balance continues to show a “tiered growth” trend, which shows that the interests of US institutions are still playing a role .
Throughout 2021, the Binance balance has been growing, and since the beginning of April, it actually started to grow faster, and then Coinbase ran out.
Given that Binance is the largest exchange and has some of the most liquid altcoin markets, as traders take advantage of the volatility of altcoins while the price of Bitcoin is consolidating, the recent spending of BTC is likely to indicate a capital round Move .
ETH benefit
It seems that it is not obvious yet that Ethereum (… and DOGE) has become the main recipient of most capital flows and has performed well in the past three weeks. To prove this effect, we can draw a reasonable consumption behavior of the old Bitcoin UTXO between 6m and 3y and compare it with the ETH price chart.
Although this is only an empirical observation (correlation> causality), after a long period of holding, the significant increase in these older BTCs has returned to circulation, which is a compelling case. This time, the price of Ethereum almost doubled, from US$2,200 to US$4,000 in ATH.
We can see the relative magnitude of this capital rotation in the “exhausted output age” belt. Starting from mid-April, as the price of BTC consolidates, the old BTC spending behavior has risen significantly .
In the past few weeks, there has been a significant increase in activity on the Ethereum chain, which shows that economic flows on the chain have supported price increases . Many indicators on the chain have experienced strong growth, including total transaction exchange rates and U.S. dollars settled in ETH transfers, to name a few.
In the end, the daily transaction volume of the Ethereum chain reached another on-chain ATH, because the increased gas fee limit increased the maximum transaction throughput . This week’s ATH reached 1.63 million transactions per day, an increase of 22.5% from the previous peak set before the 2017 macro maximum.
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