At the end of last week a BTC sales phase began, which is still ongoing.
Within the spent coins, those of 6 months to 5 years old predominate.
The most recent report from Glassnode, on the activity of the bitcoin market in the week of Monday 16 to Sunday 22 August, highlights the growth of both the volume of futures, as well as open interest, or contracts still pending settlement.
At the same time, medium and long-term holders began to take profits during that week, which closed when price action passed the psychological mark of $ 50,000.
Regarding the bitcoin derivatives market, open interest on options and futures increased last week to hit new local highssays the report.
The authors highlight that, after the fall in open interest in mid-April, from USD 27.4 billion to USD 10.6 billion, or 61%, there has been a 56% recovery. Last Sunday the 22nd, the report registered an open interest of USD 16,600 million, as highlighted in the following graph.
In terms of directional bias for traders, the report maintains that perpetual futures funding rates have a moderate bias towards long positions, as seen in the chart below. “Funding rates have remained positive since late July as bitcoin futures markets trade above spot prices,” the study says.
This means that much of the market believes that the price of BTC will go up in the short and medium term.
While positive today, funding rates do not approach the peaks observed in the uptrend of the first and second quarterse, the authors point out. “This may indicate that excessive leverage is not yet in play, and perhaps the uptrend will remain reasonably driven by the healthy spot market,” the study notes. The spot market is the sale of bitcoin at the market price, without taking debt (leverage) to acquire the asset.
Options markets also posted multi-month highs in open interest, as seen in the next chart. Open interest on options increased by more than $ 4.1 billion (+ 105%) from the lows set in June.
“The current level of USD 8,000 million in open contracts is similar to the levels seen during the liquidation of May and in January-February 2021,” says the study. Keep in mind that, in those previous cases, prices were at a lower level, trading around $ 30,000 to $ 40,000, the report says.
On the other hand, in relation to the total size of the market, the degree of open interest in the derivatives markets is relatively low compared to the degree of leverage observed in the first half of the year, asserts the study.
Bitcoin sales increase
At the end of the week, profit-taking did not seem particularly significant, but signs began to show on-chain that some investors, especially those with older currencies, started selling their BTC.
The moderate rise in sales can be seen in the following graph, which highlights a sharp decrease in BTC inventories on exchanges at the end of July, to remain fairly stable in August, and increases at the end of last week.
The net flow metric shows, in the graph below, the moderate inflows of the past week, corresponding to the profit taking of traders and investors.
The magnitude of the incoming flows, the report notes, It is similar to that registered in the bullish phase of the period between December 2020 and April 2021. This is “reasonably expected” behavior, the authors emphasize.
Identifying the age of the BTC spent
Using the Exits Spent Age Bands metric, it is possible to identify the cohorts of holders who are spending their coins, the report states. During the past week there was a spike in the oldest coins, especially those older than six months, according to the study.
In the past year, those older coins reappear in two specific instances, the report says. Either it is sales in a bull market, or a distribution in a context of intensive sales, as happened last May.
The previous graph shows how the spending of older holders, in the lower bands, has increased with increasing slope.
“We can have a similar view to the above, by looking at spent outflows between 6 months and 5 years, which largely captures seasoned bitcoin investors and traders who have already weathered non-trivial volatility in this cycle,” says Glassnode. , referring to the graph below.
There is a strong rebound in all age bands during the past week, which also suggests that some currencies are taking out liquidity, says the report. Two periods in May and June of this year also stand out (shaded in pink), in which the maximum spending of coins of different ages corresponded to price corrections.
On-chain activity continues to diverge
Until last week, on-chain activity was low and unresponsive to positive price action, the study says. Transactions remained at historically low levels, between 175,000 and 200,000 daily transactions, the report highlights.
Those levels had only been seen in a few instances in the last 5 years. The 2016-2017 bull market is one such case, in the phase in which the rally bitcoin was taken with disbelief, and in the strong corrections that occurred in the middle of the upward cycle, according to the report.
Another instance of low activity on the chain occurred when interest in bitcoin seemed to fade, in the bear market of 2018-2019, and a correction of 85% was recorded. The third scenario of low activity is the current one, says the report, which occurred after a 50% correction and 2 and a half months of consolidation.
Volume of bitcoin transactions also decreases
Transaction volumes are similarly depressed, the study notes. This means that, as there are fewer transactions, the transferred amounts are also lower. The authors add that the Bitcoin network recorded a daily volume of $ 18.8 billion last week. “This is 37% lower than the bubble peak of 2017, and 57.6% below the peak established during the capitulation event in May,” Glassnode highlights. By capitulation is understood the massive sale of an asset when its price drops sharply, and that asset is not expected to rebound. It deals with sales at a loss, to rescue some of its value, before the price deteriorates further.
However, the settlement volume is still 276% higher than the $ 5 billion level, which was typical throughout 2020, the report says. It clarifies, however, that you have to take into account the fact that the price has risen about USD 10,000 to the current level that is approaching USD 50,000 (+ 500%).
Despite the divergence between low transactional activity and transferred volume, supply dynamics remain bullish, study assures. At the end of last week, long-term hodlers hit an all-time high of 12.69 million accumulated BTC, surpassing the previous high of 12.65 million, recorded in October 2020.
In the bull market of the first half, long-term holders distributed 1.75 million BTC, which created an excess in supply and led to the all-time high in price in mid-April, the report said.
After that, investors drastically slowed their spending, and the coins that accumulated in late 2020 and early 2021 were constantly matured towards the 155-day threshold, so that their holders could be classified as ‘Long-term Holders’ .
The recovery of the supply of long-term holders to a level of historical maximum has taken only 100 days, which shows how significant the accumulation was in the initial phase of this bull market, holds the report. It also highlights that the fact that this trend has not abated yet shows that a significantly larger volume of coins is maturing.
“This adds more weight to the argument that the previous spending observed last week is likely to be from low volume of currencies and reduction of strategic risks, rather than a loss of conviction and a massive exit,” the report concludes.
The current week began with the breakdown of the USD 50,000 barrier, after which a correction took place, which would have been influenced by the increase in incoming flows of BTC on exchanges. Both events were reported by this medium. At the time of writing this article, bitcoin registers a price of USD 49,098, according to the CriptoNoticias price calculator, which represents a rebound of 0.34% in the last 24 hours.