With the Bitcoin On-chain Update we provide daily insight into patterns on the bitcoin blockchain. It is a selection of interesting on-chain statistics. It is not an exact science, the price of bitcoin is unpredictable.
However, on-chain analyzes do show medium-term trends of, for example, accumulation or sales.
1. Withdrawn more than 105,000 bitcoin
A lot has been said about it in recent days: the Bitcoin Supply Shock. One of the consequences is that there is much less bitcoin available on exchanges.
The balance has decreased by 105,011 bitcoin in just four days, Will Clemente calculates. That is more than 4.4 billion dollars which left the central exchanges in a short time. Investors choose to store it in cold storage or exchanges lend bitcoin to other market parties.
Less bitcoin on the balance sheets of exchanges is a bullish signal, because the price is determined on exchanges through supply and demand. If the supply falls that fast, that’s bullish.
=https://twitter.com/WClementeIII/status/1421575098289512448″ data-service=”twitter”>
As Clemente points out in another tweet, the accumulation behavior among investors is striking.
=https://twitter.com/WClementeIII/status/1421578105911644163″ data-service=”twitter”>
Willy Woo also sees this hoarding behaviour.
=https://twitter.com/woonomic/status/1421565118047920128″ data-service=”twitter”>
There is simply more ‘greed’ in the market (see the Fear & Greed Crypto Index) and investors suffer from fear of missing out (fomo), the feeling of missing the boat and having to buy at a higher price than now.
Also in this analysis Once again it becomes clear: exchange stocks are shrinking and are at such a low level not seen since the price level of $55,000.
2. ‘Halves lead to more potty behavior among hodlers’
Every four years, the protocol adjusts the necessary block subsidy for miners, also known as the halving. The last one took place in May 2020 and the next one will take place sometime in the second quarter of 2024.
This block subsidy halved last year from 12.5 BTC to 6.25 BTC per block. The consequence after the halving: a halving of the fresh bitcoin every day. With 144 blocks per day, ~900 bitcoin is now added. In 2024 this will be only 450 bitcoins per day.
The halving will of course have direct consequences for the available supply of bitcoin, and analysts are mainly looking at the illiquid supply. The bitcoin that is not on the market (to sell).
Analyst Dilution-proof uses the Illiquid Supply Ratio here, the ratio between the illiquid supply of bitcoin and the total bitcoin supply (18.7 million).
The outcome is always below 1 and lately around 0.8. That means ~78% to 80% of all bitcoin mined is not on the market.
Halvenings seem to actually reinforce hodler behavior, concludes Dilution-proof. Halvenings already make bitcoin scarcer, but it also leads to more hoarding behavior among holders of the crypto coin. The result is a further increasing scarcity.
=https://twitter.com/dilutionproof/status/1421475484345540609″ data-service=”twitter”>
Lex Moskovski also sees that a rising illiquid stock is a bullish signal.
=https://twitter.com/mskvsk/status/1421384042298101761″ data-service=”twitter”>
3. ‘Especially small entities continue to save hard’
Finally, Will Clemente wants to clear up another important misunderstanding. The bitcoin that is released from weak hands will not end up in the hands of a small group of whales who ‘govern’ the market.
Willy Woo also says in a recent interview with podcaster Peter McCormack that it is the small entities that play a dominant role on the network and not so much the whales.
‘Whales’ is a catch-all term and some of the on-chain whales are actually exchanges that hold bitcoin for their customers.
Clemente’s thesis is just that: retail is actually accumulating and that especially the entities smaller than 0.001 to 10 BTC in their possession. In short: they are private investors who own a substantial part of the available bitcoin.
=https://twitter.com/WClementeIII/status/1421490588415889411″ data-service=”twitter”>
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