Recently, Bitcoin has continued to pick up and its price has risen from $44,000 to $50,500. The next key resistance level is $53,000, which is the point where Bitcoin returns to the trillion-dollar market value. If it can break through this resistance level, market enthusiasm will be rekindled.
This week, long-term holders still did not cash out a large amount, only realizing some small profits on the chain. This article will evaluate the changes in the derivatives market, the status of activities on the Bitcoin chain, and the current behavior of investors, hoping to provide investors with some inspiration.
- Open interest soars
Let’s look at the changes in the derivatives market first. The open positions of Bitcoin futures have risen in tandem with the price of the currency. In May, the open position dropped sharply from US$27.4 billion to US$10.6 billion, and has now rebounded to US$16.6 billion. This week, as traders began to use more leverage, the opening of futures contracts increased by $1 billion.
At present, the perpetual futures financing interest rate is moderately biased towards the bulls. Since late July, the trading price in the futures market has been higher than the spot price, and the financing interest rate has become positive. However, market sentiment is far from the peak of the bullish trend from the first quarter to the second quarter of this year. This shows that the market has not yet entered a frenzy of excessive leverage, and the recent upward trend is more driven by spot demand.
The open interest in the Bitcoin options market also hit a high for several months, rising by more than $4.1 billion (+105%) since the low in June. The current open interest is US$8 billion, which is similar to the level from January to February (the Bitcoin price was US$30,000-40,000 at the time). From the above data, we can see that compared with the first half of the year, the current degree of leverage in the derivatives market is relatively low (the derivatives market is relatively healthy).
- Bitcoin balance of trading platform
This week, the Bitcoin balance of the trading platform rose slightly, indicating that some investors are cashing out in this wave of rebound. As shown in the figure above, the net inflow of Bitcoin from the trading platform in May was about 140,000, while the net outflow of about 110,000 in July was basically reversing the selling trend. Throughout August, the Bitcoin balance of the trading platform has been stagnating at around 2.5 million (accounting for about 13% of the circulating supply).
- Net flow of trading platform
The net flow indicator of the trading platform shows that the bitcoin on the trading platform as a whole is in a state of net inflow this week, indicating that some traders and investors are taking advantage of this rebound to cash out. It is worth noting that the size of the net inflow is similar to the bull market cycle from December 2020 to April 2021, and is still within a reasonable range for the time being.
- Realized profit and loss
As shown in the figure above, the investor’s take profit value on the chain (green line) is higher than the stop loss value on the chain (purple line). The recent realized losses have continued to decline, which indicates that as the price rebounds to around US$50,000, investor confidence is recovering.
- Chain behavior
The spending output currency age indicator can help us analyze which groups in the market are cashing out. The age of coins spent on the chain has increased significantly this week, especially for chips that have been held for more than 6 months. Judging from the situation last year, there are two situations for this phenomenon:
During the bull market, chips are distributed, that is, long-term holders cash out during the rise.
During the major adjustment period, long-term holders sell in order to reduce risk.
Recently, the spending output of 6 months to 5 years of currency age has risen sharply, which once again confirms that some of the chips are cashing out and withdrawing from the market.
- The adjusted average output life of the entity
In the cycles of 2011 and 2013, long-term chips usually only cash out near the top and bottom of the macro, but now corrections and rebounds in the middle of the cycle are more common. As more active traders and funds enter the field, the Bitcoin market is becoming more mature and financial.
A SOL refers to the average lifespan of the chip when the cost output occurs. Since July, ASOL has been rising and running through this rebound, which can be interpreted as the following two situations:
Some long-term holders are cashing out.
The currency price continued to rise, indicating that the market is absorbing selling pressure, indicating that there is enough new demand to absorb the long-term bargaining chips that are being cashed out.
- Realized market value HODL wave chart
The HODL wave chart of realized market value provides evidence for the current on-chain spending behavior. Throughout August, the proportion of coins less than one month old is expanding, which indicates that some long-term chips have been spent and transferred to new holders. . The growth rate of this indicator is consistent with the accumulation phase in 2020. This shows that although some long-term chips have been cashed out, they are still within the range that the market can absorb.
- Disagreement in on-chain activities
The number of transactions adjusted by the entity remains at a historical low of 175,000 to 200,000 transactions per day. On-chain activities still did not respond to positive price movements, indicating that the market is divergent.
In the past 5 years, this low level usually occurred in the following situations:
The 2016-17 bull market, during the early stage of the bull market rebound and the middle of the bull market deep correction period.
In the 2018-19 bear market, the market’s interest in Bitcoin weakened, and the price fell by 85% from the high.
The currency price fell in May this year, and the current stage of rebound.
Currently, the daily transaction volume of the Bitcoin network is approximately US$18.8 billion, and the on-chain transaction volume is still sluggish, 37% lower than the peak in 2017 and 57.6% lower than the peak in May this year. However, the settlement volume is still 276% higher than the total of USD 5 billion in 2020. Of course, this also takes into account that the currency price has risen from USD 10,000 at that time to approximately USD 50,000 at present.
- Supply controlled by long-term holders
Although there is a significant divergence between rising currency prices and sluggish activity on the chain, the overall macro supply dynamics are still bullish. This week, the supply of Bitcoin held by long-term holders reached a record high (12.69 million BTC ), exceeding the peak in October 2020.
In the bull market in the first and second quarters of 2021, long-term holders distributed about 1.75 million BTC, which eventually caused an oversupply and reached the top of the stage. Since then, holders have significantly slowed down their behavior, and the accumulated chips at the end of 2020 and early 2021 are also exceeding the 155-day threshold and become long-term holders.
The supply controlled by long-term holders reached a new high in just 100 days, which shows that the long-term bull market is far from over. This trend also shows that more and more chips are being held for longer, not shorter.
In summary, the long-term bargaining chips observed this week are strategic de-risking behaviors belonging to small holders (taking profit to improve risk resistance). It is not a loss of confidence in the market, nor a large-scale exit of giant whales.
Text | To the Moon
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/can-bitcoin-return-to-the-trillion-dollar-market-value/
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