February Surge and Subsequent Plunge
At the beginning of February, the cryptocurrency market was riding high, with numerous altcoins breaking free from their two-year shackles. Investors were practically dancing in the streets, seeing double and triple-digit returns almost daily. Who wouldn’t feel giddy watching Bitcoin (BTC) peak at $10,500? Analysts were rubbing their crystal balls, confident that the $11,000 and $11,500 barriers were just days away from obliteration, paving the way for a joyful return to the $12K club.
However, little did they know, the party was about to turn into a horror show thanks to a sneaky viral interloper. COVID-19, the uninvited guest that crashed the global market soirée, had been lurking since December 2019 but finally brought its dramatic flair to center stage. Investors were suddenly more interested in global contagion risk than Bitcoin price rallies.
The Market’s Crash Course
According to recent analyses, the markets buckled under the pressure, with global stocks shedding $3.6 trillion and the crypto market lightening its load by $48 billion. Bitcoin didn’t just take a dip; it belly-flopped to the tune of a $1,500 drop in a week. Panic set in as whispers about Bitcoin potentially revisiting the $7,000 zone echoed through trading rooms.
On-Chain Activity: The Other Side of the Story
While technical analysts might be sporting gloomy faces, there’s more to the Bitcoin story than just the red numbers on the charts. To dig deeper, Cointelegraph chatted with Jan Happel, co-founder of glassnode, who shed light on Bitcoin’s on-chain metrics and what they reveal about the asset’s health amidst the turmoil.
The Bullish Long-Term Sentiment
Jan noted that despite the mayhem, many long-term Bitcoin investors remain optimistic. He introduced the Bitcoin ASOL (Average Spent Output Lifespan) metric, revealing that a low ASOL indicates that weary long-term holders aren’t rushing to sell off their Bitcoin. Historically, spikes in this metric have signaled that panic selling could be around the corner.
HODLing Over Selling: The Bitcoin Resilience
So what about last week’s massive sell-off? Jan reassured us that not all hope is lost. The Bitcoin HODL waves, which track the number of BTC locked away for more than two years, are actually growing, suggesting that more investors are choosing to hold rather than fold.
In terms of unrealized profits, the situation seems healthy. Prior indicators have suggested that these metrics are excellent for spotting market tops. Currently, they hover around the levels seen at the start of previous bull runs.
The Evolving Bitcoin Network
It’s not all doom and gloom in the Bitcoin realm. Data shows that network growth is bouncing back. Jan revealed that adjusted transaction counts are on the rise again, indicating increased activity and interest. Additionally, the number of addresses holding a non-zero amount of Bitcoin continues to hit new highs every week.
Understanding On-Chain Data
Interestingly, glassnode’s research indicates that over 75% of Bitcoin’s on-chain volume doesn’t move. This finding emphasizes the importance of careful analysis in deriving meaningful insights from raw on-chain data filled with noise. As they say, it’s not just about the numbers, but how you interpret them.
+ There are no comments
Add yours