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Bitcoin and the beauty of rear-view vision

As BTC bumps up against the $50 000 resistance level, are we poised for a replay of late 2020?
Spending trends provide a clue: the older coins become, the less likely they are to be cashed in. Image: Dan Kitwood/Getty Images

A year ago bitcoin was at $10 500 and by December had smashed through the previous all-time high of $20 000.

In April 2021 it hit $63 000 and then traded all the way down to $29 200 in July, losing more than half its value in a matter of months.

It was a timely reminder that cryptos are not for the faint-hearted.

This week, bitcoin (BTC) pressed up against the $50 000 resistance level. Could this be the start of the next bull leg, coming almost exactly a year after the previous run that set new all-time highs week after week?

Source: CoinMarketCap

Blockchain research group Glassnode reports that those who bought BTC at $53 700 and above are still holding tight, but could become sellers with a view to exiting their investment as close to break-even as possible.

Those who bought in the $45 000 to $50 000 range account for 1.65 million BTC and this likely to act as a price support.

A far larger number of buyers accumulated in the $31 000 to $40 000 range since January. This is now a very strong underlying support zone.

“On net, this indicates that a fairly strong set of high conviction investors remain in the market and is a powerful signal for the bulls,” says Glassnode.

There’s also evidence that BTC and Ethereum (ETH) holders are in it for the long haul. The number of BTC transactions at 200 000 a day is about 37.5% below its peak in January. The number of ‘active addresses’ – normally seen as a proxy for the popularity of the crypto asset – is down by 35% for BTC and 33% for ETH. Despite the drop in active addresses, the prices of both BTC and ETH trended higher, suggesting a larger percentage of investors are inactive because they intend to hold.

Bitcoin: Number of active addresses

Source: Glassnode

While ETH transaction counts and active addresses are down, the magnitude of fees paid for transacting on the Ethereum blockchain are significantly higher. This is most likely attributed, at least in part, to the strong demand for non-fungible token (NFT) trading and investing.

Glassnode says “Young BTC” – those younger than three months – now account for 15% of supply and are most likely to be spent in periods of volatility.

The fact that they remain largely unspent is a bullish sign, as the older coins become, the less likely they are to be cashed in.

The same trend is evident in ETH, with a whopping 70% of the coins being dormant for at least three months. For both BTC and ETH, “these uptrends in older coin supply commenced around March 2021, which therefore reflects a very strong demand to buy and hold throughout this bull market,” says Glassnode.

Source: Glassnode

Another signal of adoption and accumulation is the growth in non-zero account balances. Bitcoin non-zero addresses have continued to grind higher, with more than 38 million addresses, and are about to take out the all-time high.

ETH non-zero addresses also cracked an all-time high in recent weeks at 60.7 million addresses.

While all this suggests strong underlying demand in both BTC and ETH, “aggressive spending of older coins would be a key invalidation signal to watch for,” according to Glassnode.

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$150+ billion staked in DeFi products
0.97% of all BTC held by public/listed US corporates(Tesla, MicroStrat) that we know of…
Every payment and trading app intergrating crypto(PayPal to RobinHood)
Every bank and money manager hiring (publicly or secretly) in crypto.
Actual countries adopting (El Sal,Cuba) or regulating(worldwide).
Many Millenials and Zoomers most or ONLY held asset class(the future)(data flimsy though)

Imagine being bearish the internet in 1995?, you NGMI

Very good summary. I think those sitting on the side line clinging to the conservative advice of the conservative financial advisors, but strangely critising this new phenomenon will miss out of one of the biggest wealth creation opportunities of our life time.

People worry they are the 1999-2001 investors of dotcom.

Either way the speculation will impact you.

I really laughed at this jewel: “The fact that they remain largely unspent is a bullish sign, as the older coins become, the less likely they are to be cashed in.”

Now if this isn’t an admission that crypto isn’t a real currency, I don’t know what is. You don’t “cash in” (sic) a real currency, you spend it.

And as we can see from this admission, there really is nothing behind crypto; it does not do what it says on the tin. It fails every single test of a real currency. What it is, instead, is nothing but a way of gambling.

And, indeed, cashing them in is indeed what you do with casino chips. That is, if you have any left.

Agree.

And yet so many dumb words are used like “hodling” and “investing”… I just with the supporters would admit it’s all the biggest pyramid scheme the world has scene built ENTIRELY on speculation.

Put your money in if you want, and that’s fine… But know why.

It always amazes me how (some) people are so over supportive too. Just nuts!

End of comments.

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