Let’s take a look at two on-chain indicators that we can use to analyze Bitcoin deposits and withdrawals from the exchanges. The data suggests we could soon be in the next phase of an uptrend.
In addition, the Bitcoin NUPL value is back above 0.5. That is why the Bitcoin price could soon continue to rise like in 2013.
Bitcoin exchange withdrawals at record high
According to data from Glassnode, the past 30 days have seen one of the largest declines in Bitcoin exchange stocks in all of Bitcoin history. The Exchange Net Position Change Indicator shows the 30-day change in the BTC on the Exchange wallet. If the number of Bitcoin there is increasing, then the bars of the indicator are green. When it is decreasing, the bars are red.
The on-chain analyst Will Clemente tweeted about the indicator on August 18, 2021. 111033 BTC are according to the tweet has been withdrawn from the Exchanges in the past three days. He described the decline as one of the biggest drops in Exchange stocks in all of Bitcoin’s history. In the past there have only been four such situations so far. These are shown in blue below. The amount of BTC withdrawn was twice smaller (2017). Twice the crowd was bigger (2020).
Interestingly, the number of wallets on the exchanges has always fallen after seeing a bottom on the longer-term Bitcoin price charts. After that, the Bitcoin price has never fallen back to the bottom (the red circles).
On the next chart of Glass node you can see the 7-day EMA of the net transaction volume. It shows you the corresponding difference in the BTC that was deposited and paid out on exchanges. The chart shows us that the BTC market is likely to be bullish again and the last accumulation phase is over.
BTC price and supply shock indicator
The illiquid supply shock indicator also gives us some clues that the bull run will soon continue. The number of non-liquid Bitcoin that is not on or connected to exchanges has recently increased enormously.
Clemente explained the positive correlation between the indicator and the Bitcoin price. He marked the strong changes in the illiquid supply shock indicator (blue) and the corresponding changes in the Bitcoin rate. Before the Bitcoin price fell, there was already a decline in the indicator values (red). Conversely, the indicator rose before the Bitcoin price rose (green). If the indicator continues to rise, then, according to the analyst, another upward movement in the Bitcoin price will follow.
In last week’s on-chain analysis, we looked at the long-term NUPL (Net Unrealized Profit / Loss). If the value of the indicator has risen from the yellow area (optimism / anxiety) to the green area (belief / denial), then there was usually a continuation of the bull market. We wrote that a similar constellation only happened once in a bull market, namely during the bull run from 2013 to 2014. Otherwise, the NUPL indicator initially always returned to the red zone.
The analyst Charles Edwards posted an interesting chart of the same indicator. However, he used a different scale and bars instead of a solid line. He has marked the points at which the NUPL has fallen below 0.5 and a bear market has started with the red arrows. When the NUPL rose above 0.5 (the blue circles) there has been an increase in 2013 and until now. We will see if the Bitcoin price will continue to rise anytime soon.
Abovesets by Maximilian M.
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