The price of bitcoin holds positions near the psychological level of $25,000, despite the pressure from US regulators. Glassnode analysts explained this situation by a significant change in the behavior patterns of market participants.
Despite regulatory pressure on digital assets exerted by the US, Bitcoin prices still rallied above $25k, and Inscriptions breached 100k total.
Meanwhile, investor behavior on-chain appears to be reaching a turning point, hinting at a new cycle.https://t.co/ZviHGdwdA4
— glassnode (@glassnode) February 20, 2023
Analysts noted the continued interest in the Ordinals protocol – the number of NFTs issued in the network of the first cryptocurrency exceeded 100,000.
The share of Taproot-signatures, thanks to which the placement of such objects became possible, fell from 8.12% to 2.87%, but remains at an increased level.
Ordinals do not require the transfer of large amounts of BTC – most of them use ~10,000 Satoshi (0.0001 BTC), but are a significant source of demand for the blockchain space. The block size remains in the range of 2-2.5 MB with a limit of 4 MB versus a maximum of 1.5 MB prior to project launch.
Growth of network activity and increase in total UTXO to ATH did not lead to the activation of on-chain transfers among both hodlers and speculators. For coins less than six months old, the daily average remains below 115,000 BTC – such weak values were observed only a few times in history.
The number of coins that last moved on the blockchain six months ago or later has approached ATH of 15.03 million BTC. The same figure for bitcoins over a year old also hit an all-time high of 12.91 million BTC.
Weekly spending of coins older than six months has fallen below 4770 BTC. In the past, this has indicated at least a further upward correction in bear markets.
Dynamics of the aSOPR indicator (7 DMA) indicated a return of the “buy any drawdown” paradigm among short-term investors. The metric broke the level of 1 and tested it twice as support. In other words, profit-taking and the desire to break a loss in this category of market participants have declined, analysts noted.
The chart below shows the decline among speculators in the relative share of realized gains and losses in the context of centralized intermediaries.
“Short-term players ‘on their last breath’ are being washed out. Bitcoins are moving to “bottom-catchers” for coins with a lower “cost”experts explained.
As the market recovers, speculators lose their motivation to send coins to exchanges to realize profits. The total volume of such transfers remains in the range of 15,000-21,000 BTC. With the exception of episodes of capitulations, values have remained in this corridor since June 2021.
A similar indicator for hodlers indicated a gradual increase in the dominance of losses among them – the best buyers of the previous cycle are gradually shifting from their positions until the final squeeze.
“Of all the realized value of coins sent to exchanges, these losses have dropped sharply from a cycle peak of 58% in mid-January to the current 21%. A similar situation has been observed in every previous cycle, as this again gives the necessary hope for hodling. A similar final capitulation usually peaks near the bottom of a bearish trend and just after the cycle begins to unfold.” experts concluded.
Recall that Galaxy Digital founder Mike Novogratz allowed bitcoin at $30,000 by the end of March.
Earlier, Adam Farthing of B2C2 opined that Bitcoin needs to break $25,000 to continue the rally.
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