It’s still a bit of a struggle with the bitcoin price. We’ve been ping-ponging around the same level for weeks, it’s high time to analyze some data from the blockchain again. Most of the time, Glassnode’s data helps to find an explanation for bitcoin’s price movements. What is particularly striking at the moment is that the on-chain activity has fallen sharply to levels that we last saw in 2020.
For example, the number of active bitcoin addresses has fallen by 24 percent from the peak value of 1.16 million we saw from March to early May. We currently have around 884,000 active addresses. The last time we recorded a value around this level was in the period May-June of the year 2020. That also affects the total value that passes through the network on a daily basis. For bitcoin, it has fallen by 63 percent to about 15 billion euros per day.
Now is the time to make cheap trades
Do you still have to make a lot of trades or have you always wanted to open a Lightning channel? Then now is a good time to do so. The costs to be included in the next block of the bitcoin blockchain are currently relatively low. Total daily transaction costs are currently less than 30 bitcoin per day.
Source: Glassnode
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The Glassnode chart shows that we are at the level of the period from October 2019 to April 2020. The 30 bitcoin per day that the miners bring in in transaction costs represents about 4 percent of their total revenue. Which means they are still bringing in 96 percent of the revenue thanks to the subsidy of 6.25 bitcoin per block.
It seems that the hype surrounding bitcoin has at least died down for a while. However, that doesn’t mean the bull run is over. You often see that at the moments when everyone seems to lose faith, bitcoin starts up again for the next sprint. The coming weeks will show whether we needed this breather to continue our way up.
Similar situation to the peak of 2017
If we approach the market from a macro perspective, the current situation is very similar to the peak of 2017. Especially when you consider the amount of bitcoin held by investors who hold bitcoin for the long term (blue) and investors holding bitcoin for the short term (red). The graph below from Glassnode shows what percentage of all bitcoin these groups hold and to what extent they are in the plus (dark colors) or the minus (light colors).
Source: Glassnode
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What you can clearly see in the chart is that the number of bitcoin in the hands of the people who are in it for the long term has fallen after the price started to peak. Exactly as we saw in the bull run of 2017. We are now past the point where the long term hodlers are selling their bitcoin and seem to have started to re-accumulate.
Since we hit this year’s all-time high, long-term hodlers have bought up 5.25 percent of all bitcoin. Of that 5.25 percent, about 1.5 percent is under water. Despite this, however, they seem to remain confident in the bitcoin price in the long run, as so far they have generally not exited their positions.
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