Investing.com – A powerful on-chain signal suggests Bitcoin bulls have reason to be a little more optimistic, writes crypto analytics firm Glassnode.
Wrestling with the psychologically significant $ 50,000 mark since August 20. So far, the world’s most important crypto currency in terms of market capitalization has not managed to break this mark. It would be an important sign if BTC managed a sustainable spurt over this hurdle; after all, some analysts see this as a prerequisite for the cyber currency to return to its all-time high of $ 64,700 that was reached in mid-April.
In its weekly report, Glassnode has now identified three trend-relevant Bitcoin price ranges in which large amounts of BTC have recently been traded.
According to the consulting firm, the first range is between $ 31,000 and $ 40,000, which they refer to as a possible “price floor”. The second range extends from $ 45,000 to $ 50,000, where 1.65 million bitcoins have a cost base. And the third zone ranges from $ 53,000 to $ 59,000, which is where Bitcoin’s trillion dollar mark is, according to Glassnode.
“The chart below illustrates the price ranges in which BTC tokens were last traded. Since hitting the former all-time high of $ 20,000 in the last cycle, three different on-chain volume bands have formed.”
According to Glassnode, these three volume clusters now serve as a guide for BTC traders who want to bet on future price increases at the mother of all cryptocurrencies.
“The bottom line is that this suggests that quite a large number of high-conviction investors remain active in the market, which is a strong signal for the bulls.”
While not all on-chain data has a clear go for higher Bitcoin quotes, supply momentum has historically been in a healthy range, according to the analytics firm.
“… the supply dynamics provide a fairly robust signal in both directions. Even if the observation of accumulation and HODLing is usually more of a long-term indicator, the current market trend looks historically strong for the bulls …”
The decline in so-called HODL waves for coins that were recently acquired (less than six months ago) suggests that investors prefer to hold coins rather than sell them. The proportion of so-called “Young Coins”, which are mainly held by speculators and short-term oriented traders or investors, only makes up 15 percent of the BTC supply. A very dynamic downward trend can be observed here, as Glassnode discovered.
As these still young tokens mature and age, they transition into medium-old (3 months to 1 year) and old tokens (over 1 year). These older tokens are statistically less likely to be sold, and their increasing proportion indicates an increasingly illiquid supply.
“With Bitcoin, a strong upward trend can be observed in the token holding period. Almost 50 percent of the token supply are now between 3 months and 3 years old.”
According to Glassnode, the dynamics of supply looks similar.
“The HODL waves at Ethereum are similar to those of Bitcoin. The number of coins that were recently acquired (less than three months ago) is currently hovering around 12.5 percent, which is a long-term low in circulating supply,” like the Experts write.
Overall, the supply dynamics for both Bitcoin and Ethereum suggest “extremely robust core demand,” said Glassnode, and added that this should continue to have a very positive effect on prices as long as the trend continues. What BTC and ETH traders should watch out for, however, are “aggressive sales of older tokens”. This would be a clear warning sign.