The indicators on the chain indicate that Bitcoin’s current rise is more driven by institutional investors, and there is still room for growth in Bitcoin adoption and price before retail investors enter the market.
Original title: “Glassnode 丨On-chain indicators show that 2021 will be a crazy bull market? 》
Written by: LIESL EICHHOLZ
Translation: Olivia
After a rather turbulent week, Bitcoin and other crypto markets seem to be in a recovery phase, with Bitcoin rebounding above all-time highs and approaching $20,000.
Bitcoin market health
Bitcoin and other crypto markets have spent a turbulent week. At the beginning of the week, it exceeded $18,600 and then rose to over $19,000. However, it fell sharply on Thursday and finally found support at $16,500 and rose slowly, eventually ending at $18,145.
However, as of Monday, Bitcoin was rapidly approaching $20,000, and even briefly broke through the historical high of $19,783.
Bull market
The number of active traders (level 3) on the Bitcoin blockchain has steadily increased throughout 2020. The current daily number of active traders 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 increased network adoption and usage. However, unlike the previous bull market, the number of new traders (level 3) is still relatively low .
This suggests that the current rebound may be driven more by institutional investors than by retail investors . Therefore, before retail investors start entering the market, we may expect more growth in adoption and prices.
Bear market
Corresponding to this bullish view is the adjusted number of traders ASOL (level 3), which shows that the average age of coins being traded is increasing rapidly. Higher value means that in general, older coins are being transferred, which may mean that longer-term holders are realizing profits .
On November 28, the average transaction age of the currency was 43.9 days. The last time a trader adjusted ASOL so high was in January 2018, when long-term holders dumped Bitcoin when it fell from a historical high. The recent surge indicates that long-term holders are realizing the profits of the past few years. This analysis is supported by the increase in the number of days of currency destruction (layer 2) and the increase in LTH-SOPR (layer 3).
However, this model is different from the 2017 bull market. The surge in ASOL (Average Spent Output Lifespan) occurred while prices were still rising , not after peaking. 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 have doubts about the potential for continued price movement above ATH at the beginning of the year.
Willy Woo’s bullish view
The re-accumulation stage of this bull market coincides with the longest and deepest consumption of Bitcoin inventory on spot exchanges in Bitcoin’s 12-year history.
So far, this consumption has lasted for 10 months, doubling the 5-month span of the previous cycle. Similarly, the amount of coins mined from exchanges and entered into cold wallets was 19%, compared with 11% in the previous cycle. In view of this, 2021 is expected to be crazy optimistic.
Although the market may need to cool down in some areas after the strong rebound in November, the long-term market structure is a bullish trend. Think of the next few weeks as the last bargain-hunting buying opportunity before Bitcoin breaks through all-time highs and starts the price discovery phase above $20,000.
Once the US$20,000 has passed, there will be no historical resistance level to compete for, so that the price discovery mechanism will initiate the price upward movement at a higher speed. Investors should consider fully deploying funds before historical highs.
Altcoin Topic: The end of UNI liquidity mining leads to a drop in the supply of WBTC in smart contracts
Between September 17 and 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 obtained UNI Token. But on the day the mining ended, the proportion of the locked-in supply of these two assets declined (secondary) – for WBTC, the decline was particularly large.
After the end of UNI mining on November 17, ETH saw a drop of 0.8 points, and the use cases of WBTC are naturally less than the original assets of Ethereum. However, as users withdrew their liquidity from Uniswap, this caused a 10-point drop in WBTC and at the same time caused the total liquidity on Uniswap to drop by $1.3 billion-a drop of more than 42% from the previous day.
After mining, the liquidity on Uniswap decreased by 1.3 billion USD (source: uniswap.info)
Compared with WBTC, other assets that support UNI liquidity farming (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 is locked in these pools, the price of ETH has not been affected by the return of these currencies to the market, indicating that their owners continue to hold even after the betting ends. Have them.
