99 Interactions, 4 Today
On-chain data is increasingly resembling the springboard era for the Ether and Bitcoin bull markets in mid- and late-2020.
Bitcoin (BTC) and Ether (ETH) have begun to exhibit “remarkable” bullish divergences, indicating the beginning of bullish price movements.
This is according to the most recent data acquired this week by on-chain analytics firm Glassnode.
BTC, ETH data mimics “mid to late 2020”
In its latest weekly report, “The Week On-chain,” Glassnode revealed that while price action remains quiet, on-chain metrics suggest that it could well be lagging behind much more bullish sentiment.
“As the Bitcoin and wider cryptocurrency market rallies higher, a remarkable on-chain divergence continues to form across both Bitcoin and Ethereum,” the report summarizes.
“On-chain activity on both chains has remained quiet relative to bull market highs, even as price momentum continues upwards, and bullish trends in supply dynamics remain in play.”
The signs are everywhere — from mushrooming network participation to record transaction value, Bitcoin and Ethereum are anything but quiet under the hood.
Active entities on the Bitcoin blockchain are particularly noteworthy. Despite prices being near $50,000, these are still one-third below all-time highs but growing rapidly.
“It is notable that current activity on both chains is similar to the stable pre-bull accumulation range established in mid to late 2020,” analysts added.
The discrepancy between these on-chain tendencies and price action is already well documented, and it resembles the crypto market in Q4 2020, just before the recent bull market truly took off.
“While the difference between price and on-chain activity is historically unusual for a full-scale bull market, it is not an uncommon indicator for the pre-bull, pre-supply-squeeze dynamic,” the paper says.
“These periods often accompany the end of bear market accumulation where the investors who remain, are the strong hands, those with the highest conviction.”
Bitcoin token transfers hit a two-year high
One nuance is concerned with transaction numbers. These are also about 40% down than its peak, although Bitcoin had its best week in two years in terms of BTC transferred this month.
“These transactions were not from exchanges,” Ki Young Ju, CEO of fellow analytics business CryptoQuant, said, offering various plausible reasons for the figures.
$BTC Tokens Transferred (not entity-adjusted) hit a two-year high a few days ago.
These transactions were not from exchanges.
Possible explanations would be:
1/ OTC deals
2/ Whales moved due to regulations
3/ Unlabelled exchange wallets moved for security or regulation reasons pic.twitter.com/4g60n9xhEM
— Ki Young Ju 주기영 (@ki_young_ju) August 31, 2021
Should the status quo continue, the outlook for BTC and ETH price action is rosy, Glassnode concludes, adding that only “aggressive selling” of coins that have not moved for an extended period of time would constitute an invalidation of the bull signals.