3 on-chain indicators show that Bitcoin price sell-off is losing momentum

Bitcoin (Bitcoin) After falling from $42,600 on Coinbase to $30,000 on May 19, it entered the consolidation phase. The flagship cryptocurrency quickly recovered its losses and recovered $40,000, but failed to obtain a clear bullish break above that resistance level, and at the time of writing, the price is still fixed below $40,000.

The latest price movements in the Bitcoin market have been volatile at best, and traders have not clearly stated their short-term bias.Some analysts Expected If the price of BTC/USD does not exceed $40,000, it is likely to fall to $20,000 in the next trading day.

Interestingly, a few on-chain indicators tell a different story.One of the most interesting themes to keep Bitcoin’s bullish preference unchanged is witnessing long-term holders and accumulating addresses Stack more bitcoins During the recent price drop.

In addition, a metric called “Bitcoin Entity Adjusted SOPR” (spending output profit rate) indicates that the market no longer sells Bitcoin at a gross loss.

The adjusted SOPR of the Bitcoin entity. Source: Glassnode

At the same time, the data on the chain shows that the exchange’s foreign exchange reserves have declined, which indicates that traders have been withdrawing their digital assets to cold wallets or depositing them in the DeFi liquidity pool to obtain more generous returns.

Although the short-term view may lean towards bears, the following three on-chain indicators suggest that Bitcoin may be bottoming out.

Bitcoin: Output age range spent

The adjustment of Bitcoin prices has led to three reactions in the spot market. The first involves panic sales by short-term traders who sell Bitcoin to minimize their losses, probably because they bought cryptocurrencies that are close to their highest point.

The second reaction involved HODLER, who decided to keep their current supply of Bitcoin.They show long-term belief in Bitcoin’s bullish bias Supporting macroeconomic fundamentalsFactors such as ultra-low interest rates, low government bond yields, inflation concerns and the depreciation of the U.S. dollar make hedging assets like Bitcoin look attractive to HODL.

The third reaction is a mix of HODLers and accumulators, as traders use the drop in bitcoin prices to buy more cryptocurrencies at “discounts.”

Various on-chain indicators show that during the price crash, there is a huge difference between the Bitcoin reserves held by short-term holders and long-term holders.

For example, last week’s “Bitcoin: Across the Age” chart showed that coin sales from one day to one week were greater. These coins continue to enter and exit the market, accurately reflecting the state of market price fluctuations last week.

Bitcoin was spent in the output age range calculated based on the 7-day moving average. Source: Glassnode

At the same time, due to the recent price collapse, coins that have not been used within 1 to 3 months and 3 to 6 months have also changed addresses.

Traders who have kept bitcoins in their wallets for 1-6 months transfer them in May. Source: Glassnode

Another Glassnode indicator called “Bitcoin: Total Supply Held by Long-term Holders” shows that long-term holders (entities who hold bitcoins for more than six months) become the most important part of the tokens sold by short-term holders. The biggest beneficiary.

In the May crash, the supply of Bitcoin held by long-term holders continued to increase. Source: Glassnode

Anthony Pompliano, an investor at Pomp Investments, said in a weekly note to clients:

“Long-term holders are increasing their positions, short-term holders are selling, and certain entities in the short-term class have now reached the 155-day threshold for this indicator and are now in the long-term class.”

This disagreement shows that as more and more serious holders take a stand against the current macroeconomic crisis, Bitcoin prices will remain stable for a long time.

Bitcoin balances on exchanges fall

Bitcoin net reserves held by cryptocurrency exchanges also have Has dropped in the past 7 days, Indicating that fewer and fewer traders want to sell their bitcoin holdings.

This indicator points to typical trading behavior. Traders only deposit bitcoin in their exchange wallets when they wish to sell their fiat currency or trade them as other digital assets. As a result, the BTC reserve on the trading platform increased.

Bitcoin reserves on the exchange have decreased by 14,207 BTC in the past 7 days. Source: Glassnode

Conversely, a higher BTC withdrawal volume reflects a trader’s decision to hold the cryptocurrency. This means that Bitcoin will not face immediate selling pressure in the spot market, as the latest data from Glassnode shows.

Bitcoin accumulation address and balance rise

The total number of cumulative addresses and balances in these wallets are increasing. In retrospect, a cumulative address refers to an address that has received at least two BTC transactions but never moved assets out of the address.

Convincing Bitcoin bulls continue to pile up during the price decline, source: Glassnode.

In the past 7 days, the number of these cumulative addresses has increased, adding 7,430 new wallets.

Another indicator called “Bitcoin: A supply of 0.01-0.1 balances held by entities” indicates that new users entered the Bitcoin network during the price drop. In addition, the supply of addresses containing 0.001 BTC to 1 BTC has increased in tandem, indicating that retail interest has grown steadily.

As the price drops, the Bitcoin supply held by wallets holding a peak of 0.01-0.1 BTC. Source: Glassnode