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The Fight For Bitcoin: The Keys To Victory
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Tag: Utxo
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Veteran Bitcoin hodlers are still selling record low amounts of BTC despite 70% gains in 2021
Seasoned Bitcoin (BTC) hodlers have hardly spent any coins despite $69,000 all-time highs this year, data shows.
According to the Coin Days Destroyed (CDD) metric from on-chain analytics firm Glassnode, the proportion of coins being spent by old hands remains near record lows.
Strong hands knuckle down throughout 2021
In the latest sign of the conviction of those who invest in and hold Bitcoin over multiple years, CDD remains extremely calm.
The indicator refers to how long each BTC has been dormant each time it moves. This provides an alternative to simple volume measurements to determine market trends. Older coins are thus more “important” than younger ones with a history of active movement.
“Despite a rise over the last few months, the current value is still around historic lows,” Twitter account UTXO Management summarized alongside an imprint of the chart.
The data highlights that since a spike in old hand selling after BTC/USD crossed 2017’s all-time highs of $20,000 last year, strong hands have stayed firm.
Even the run to nearly $70,000 failed to break the trend significantly, and selling still appears to be coming from newer market entrants.
Summer buyers are winter sellers
Another metric, Unchained Capital’s HODL Waves, confirms this — those coins purchased between three and six months ago now account for the biggest decrease in the overall supply.
Related: Countdown to the yearly close: 5 things to watch in Bitcoin this week
This implies that sellers acquired their BTC between June and September this year, the period during which BTC/USD dipped to lows of $30,000.
As Cointelegraph reported, clear distinctions between different groups of hodlers have long been under the microscope.
Even those who entered the market at $20,000 are doubling down, as BTC/USD looks set to end 2021 around $20,000 higher than at the start of January.
#Bitcoin is once again in accumulation mode. pic.twitter.com/BezC2AUewO
— Dylan LeClair (@DylanLeClair_) December 23, 2021
Meanwhile, UTXO Management senior analyst Dylan LeClair last week noted that overall, hodlers are adding to their positions this month.
Bitcoin’s Price Doesn’t Matter: Adoption Does
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Realized Bitcoin Price Breaks All-Time High
The realized bitcoin price, measuring the value of every UTXO last moved to calculate the price of bitcoin, has hit its highest-ever mark.
The below is from a recent edition of the Deep Dive, Bitcoin Magazine‘s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.
The realized price of bitcoin has broken its all-time high reached on May 12 earlier this year, with the metric currently at $20,200. Realized price measures the value that every UTXO on the network last moved to calculate the price of bitcoin.
Whereas the market capitalization of bitcoin is calculated by multiplying the circulating supply by the spot price, the realized capitalization takes every “coin” on the market and uses the price at which the coin (or more technically: UTXO) last moved in the calculation. Thus, the realized price is simply taking the realized capitalization and dividing it by the circulating supply.
Realized price can often provide more signal as to investor activity on the network, as it quantifies that bitcoin is actually exchanging hands, and that price is not just being bid up on the margin via the derivative markets, or by whales wash trading.
In the Daily Dive #022, we covered the trends surrounding realized price as bitcoin pulled back 50% from the all-time high, pulling down realized price with it, as class of 2021 investors capitulated in a major way.
When looking at the history of realized price, interesting patterns emerge in different market phases, and sustained drawdowns in realized price are not a positive sign.
Chart From The Daily Dive #022 – A Deep Look Into On-Chain Accumulation
“It is very possible that realized price could follow a pattern similar to the 2013 cycle, where realized price briefly started a downward trend before recovering with the start of the second act of the infamous ‘double bubble.’ In our opinion, this is the most probable case, rather than a multi-year bear market followed by re-accumulation.” – The Daily Dive #022 – A Deep Look Into On-Chain Accumulation
With the increase in realized price to all-time high levels, as well as bitcoin still being around 27% below the ATH price set in April, the market value to realized value ratio is at much more attractive levels.
Fear And Greed: Sentiment Turns Neutral As Bitcoin Stagnates, What To Do?
It’s the calm before the storm. What to do when the Fear and Greed index turns grey? Warren Buffett already told us to be greedy when others are fearful. We already know that we should be fearful when others are greedy. What should we do when the market it’s at a rare state of balance and expectations are high? We should probably take a page for those Bitcoin maximalists and… wait for it… HODL!
One of the main criticisms that the Fear and Greed Index gets is that it encourages traders and investors to try to time the market instead of holding strong. Bad things happen to those who try to time the market. Yet, we try to do it. The temptation is too strong. Bad things happen to those who trade emotionally. Yet, some fall for that trap over and over again. In fact, it could be argued that the Bitcoin and cryptocurrencies markets are even more emotional than the traditional ones. And that’s saying a lot.
In any case, before making any rash decisions, we should remember what we’re talking about here.
The Fear & Greed Index goes into neutral territory | Source: Arcane Research
What Exactly Is The Fear And Greed Index?
We at NewsBTC deal with this constantly. Even though the Fear and Greed Index is a criticized and questionable indicator, there’s an undeniable connection to the market that’s obvious even to the casual observer. When we found a bizarre correlation between the Fear & Greed Index and UTXO data, we prefaced it with:
“As a speculative asset, nothing else quite behaves like Bitcoin. Shifts in sentiment take price action to the extreme. As a result, tools have been developed to monitor the fear or greed in the market.”
The website Alternative.me calculates the main Fear And Greed Index for cryptocurrency markets, they explain its reason to be as:
The crypto market behaviour is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear of missing out). Also, people often sell their coins in irrational reaction of seeing red numbers. With our Fear and Greed Index, we try to save you from your own emotional overreactions. There are two simple assumptions:
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Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.
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When Investors are getting too greedy, that means the market is due for a correction.
We, very simply, explained why when we described how the Fear And Greed Index can be used as a trigger indicator:
“Financial market sentiment can almost always be used as a contrarian indicator. But in a speculation driven industry where hype and buzz matter more than fundamentals, this is even more true.”
BTC price chart on Bitstamp | Source: BTC/USD on TradingView.com
What Does It Mean When The Sentiment Turns Neutral
After what seemed like years of coldness and extreme fear, the market sentiment started improving as early as a week ago. And, even though it doesn’t feel that way, this advance into neutral territory is a huge improvement. As Arcane Research said in their “The Weekly Update” report:
“The Fear & Greed Index has climbed rapidly since late July and touched neutral levels for the first time since May. Despite the slight decline in the last couple of days, the market is certainly getting more bullish. This bullishness is also evident in the futures market.”
So, what should you do now that the sentiment turned neutral? Not much. Keep your finger on the trigger, though. Things are about to get interesting.
Featured Image by Kristopher Roller on Unsplash - Charts by TradingView
Bitcoin’s $1 trillion market holds for 10 days straight
More than 10% of BTC supply has been moved while Bitcoin’s market capitalization has been more than a trillion dollars since March 26, indicating strong support in the middle and upper-$50,000 price range.
According to the April 5 ‘Week on Chain’ report from on-chain analytics provider Glassnode, Bitcoin has enjoyed a $1 trillion market capitalization for more than one week for the first time. “This is a strong vote of confidence for Bitcoin and the cryptocurrency asset class as a whole,” the report said.
Glassnode also noted that 1.98 million BTC have moved on-chain while Bitcoin’s capitalization has held above $1 trillion, equal to 10.6% of the circulating supply. The report noted the mid-to-high $50,000 range has shown the strongest on-chain support since prices were roughly $11,000:
“Impressively, this on-chain volume has formed one of the strongest on-chain support levels since prices were $11k to $12k.”
Bitcoin’s market cap first broke its $1 trillion milestone on Feb. 19, but quickly dipped back below to 12-figures for the following 17 days. BTC tagged 13-figures again on Mar. 9, but another correction dropped Bitcoin’s capitalization back to $950K.
Bitcoin’s capitalization has now remained above $1 trillion since March 26, and is currently sitting at $1.1 trillion according to Coingecko.
Glassnode’s analyzed Bitcoin’s UTXO Realized Price Distribution, or URPD, to show significant recent volumes above a $1 trillion capitalization for BTC.
The report notes that Bitcoin miners have returned to “accumulation mode,” signalling further bullishness as miners are again hodling onto their newly minted coins for higher prices.
At the time of writing, Bitcoin was changing hands for $59,030, up 1.9% over the past 24 hours.
Realized Cap is the sum of each UTXO * last movement price. Since cryptocurrencies can be lost, unclaimed, or unreachable, Realized Cap is helpful to discount those coins which have remained unmoved for a long period. Invented by @kenoshaking @woonomic @MustStopMurad
Realized Cap is the sum of each UTXO * last movement price. Since cryptocurrencies can be lost, unclaimed, or unreachable, Realized Cap is helpful to discount those coins which have remained unmoved for a long period.
Invented by @kenoshaking @woonomic @MustStopMurad
Amid DeFi Hacks, Nervos and Cardano Join Forces to Improve Smart Contract Security
Blockchain projects Nervos and Cardano are working together to improve the security of UTXOs to reduce smart contract hacks.
3 years later and the UTXO count on BCH just keeps dropping, suggesting that user adoption also continues to drop and funds consolidate into fewer hands.
3 years later and the UTXO count on BCH just keeps dropping, suggesting that user adoption also continues to drop and funds consolidate into fewer hands. https://t.co/5W7mgYSKr0