Bitcoin On-Chain Update (February 10th 2022)

Bitcoin On-Chain Update (February 10th 2022)

Bitcoin On-Chain Update (February 10th 2022)

Bitcoin on-chain analysis is an emerging field that involves examining a cryptocurrency’s fundamentals, utility, transaction activity, and blockchain data.

On-chain analysts attempt to improve their understanding of a network to predict future price movements by analyzing various metrics. As we will discuss below, on-chain analysis involves gaining insights from the following types of blockchain data:

  • Bitcoin Reserves
  • Bitcoin Netflows
  • Bitcoin Miners Position Index
  • Exchange inflows and outflows
  • And more…

Table of Contents

Bitcoin Reserves

Bitcoin Reserves

Bitcoin reserves on exchanges continue to make a new all time lows.

BTC Netflows

Bitcoin Neflow

Bitcoin Netflows are negative –  meaning more of outflows than inflows.

Bitcoin Miners Positions Index

Bitcoin Miners Position Index

Bitcoin miners have not been selling in whole of this dump and their position index remains at the bottom zone.

Bitcoin Exchange Whale Ratio

Bitcoin Exchange Whale Ratio

Bitcoin Exchange Whale Ratio is relatively low. Interestingly, the divergence between this metric and the price has worked on a few data points. There was a hidden bullish divergence on the latest low.

Bitcoin Estimate Leverage Ratio

Bitcoin Estimated Leverage Ratio​

Bitcoin estimated leverage ratio is still at an all-time high; in our previous report, we have seen the data where we have noticed pullbacks when this metric peaks. However, in the case of a short squeeze, this can work oppositely. So keep Seers’ OI funding analysis in mind while reading this metric to keep watching the funding rate; positive funding for a sustained period can lead to a pullback, and negative funding can lead to a short squeeze.

Bitcoin Market-Value-to-Realized-Value (MVRV)

BTC MVRV

MVRV is currently at 1.84; it has bounced off from 1.50, indicating that when Bitcoin hit the latest bottom, all the wallets had +50% unrealized profits in total.

Historically, the cyclic bottom comes when MVRV reaches below 1. However, we have bounced off from the last support of a bull cycle. Whenever MVRV has gone below 1 it has indicated a bear market bottomish area.

Bitcoin Adjusted SOPR (Spent Output Profit Ratio)

BTC Adjusted SOPR

Bitcoin Adjusted SOPR has now started to evolve in the positive zone. We did not get the same level of capitulation as per the previous crashes. It indicates that most participants are not underwater anymore, and the price is their cost basis. In a trending environment, you want to see SOPR bounce off of 1 and stay positive.

BTC whale map

The last good capitulation spike we saw in SOPR was at 45,686 when whales bought at 47k sold at a loss, so we will keep this price level in mind as it can pose resistance now as many coins have changed hands at this price level.

STH SOPR

The majority of the market is in profit. We need this metric to hold 1 as support and bounce off it.

BTC STH SOPR

Jump moves that initiate a mark-up phase often occur as STH SOPR approaches 1 on the 24hr, and not before.

Bitcoin LTH SOPR

A large LTH SOPR value came in at 2:22 am on 9th FEB.

Then there was a $1000 drop. 

BTC LTH SOPR

However we have seen a similar spike in LTH SOPR at 29k bottom

BTC LTH SOPR

Bitcoin MVRV & Miners

When MVRV surpassed ‘3’ in December 2020, Miner Reserve decreased sharply, and Miner Outflow increased. (At that time, Bitcoin price was about $28,000)

If a specific price range were used as a sales standard, they would have sold Bitcoin when it renewed its high point in November 2021.

However, the miners did not move.

We think miners having not sold Bitcoin at new high points is related to MVRV. (MVRV went up to 2.93, November 21)

Currently, miners continue to increase their holdings without much withdrawal. 

BTC MVRV AND MINERS

Bitcoin NUPL

BTC NUPL

The majority of the market is in profit. We need this metric to hold 1 as support and bounce off it.

Bitcoin Funding

is neutral after a sustained negative zone for few weeks

btc max pain

Bitcoin Fear & Greed Index

NEUTRAL
BTC FEAR & GREED INDEX

Active Address Sentiment Indicator

Active Address Sentiment Indicator

We were in our earlier reports watching this indicator to hint at the bottom. It gave the bottom signal on the 22nd of Jan, and now it has moved well inside the band.

When the orange line reaches the upper boundary (red dotted line), it indicates that short-term market sentiment is overheated, because the rate of price increase is outstripping the rate of increase inactive addresses. However, the opposite is true when the 28-day price change hits the lower boundary (green dotted line). Here market sentiment is overly bearish, and we often see Bitcoin price increasing after that.

Bitcoin HODL Waves

Around December the 4th, ~3% of the coins not moved in 2-3Y transitioned to the 3-5Y band. That is around 3% of the total supply:

BTC HODL WAVES

Here you see the 24H-6M old coins. A global glimpse of pure distribution by LTH’s is visible when the amount of younger coins rises sharply because of aggressive selling of ‘older’ coins. The amount of younger coins is at an all-time Low now confidence amongst LTH’s

BTC HODL

Confirmation is given by the ‘90D Coin Days Destroyed’.

i.e., A coin not moved for 99 days, sold at day 100 counts for 100 days.

The higher the number, the more distribution (or capitulation). 

As you can see, impressive tops on this metric go hand in hand with market tops.

Confirmation given by the ‘90D Coin Days Destroyed’.

The Medium-sized – Whale investor wallets, which contained more than 1 Bitcoin, decreased from January ‘21 till June ‘21.

Ever since then, the amount of these wallets are rising again, which also suggests (re)accumulation (lil Glitch is due to that finex thingy)

Number of Address with 1 Btc

The amount of wallets with a non-zero balance is currently at an ATH.

Smol fishes keep stacking silently too

The amount of wallets with a non-zero balance is currently at an ATH.

Conclusion

Remember that BTC on-chain data is for the mid to long term. In the past month, it has been suggested that supply has been drying up, and holdings are shifting from short-term holders to smart money and whales. The coins are changing hands, and supply is becoming illiquid. Bitcoin whales addresses are buying. So even though BTC could dip following a global scenario, war, inflation, and stock market crash, there are signs that long-term holders find the current price to be a good entry point. However, supply is half of the story. 47k resistance has a substantial area of confluence: 

  • Being the yearly open, 
  • point of breakdown of market structure in May (break below the lower low), and short term holder cost basis i.e., 47100 

We were buying at a lower 33k region in our exclusive discord channel. 39,500 and 47k were our TP zones (and not a place to open a new position)

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Happy trading !

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