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Bitcoin entered the third month of the third quarter on a strong note. Following a more than 40% drop in Q2, many in the community believe the king currency will soon surpass its previous all-time high. After two weeks of steady stability, BTC oscillated slightly above $50,000 at press time, bolstering such expectations. Furthermore, it appears that on-chain indications have finally aligned to pave the way north for top cryptocurrency.
A recent Glassnode report highlighted how with the price pushing above $50k and some notable profit-taking last week, the market currently is sitting at the top end of a very high on-chain volume node.
Consider this – The chart attached herein highlights the price bands where the current BTC supply was last transacted. Since breaching last cycle’s $20k ATH, three distinct on-chain volume bands have formed.
Looking at the Bitcoin market’s big picture stance in terms of three distinct on-chain volume bands – $31k to $40k (price floor), $45k to $50k (present range), and $53.7k to $59k (trillion-dollar asset) – helps grasp the market’s bigger attitude. It suggested that a sizable number of high-conviction investors remained in the market – a positive indication for bulls.
Bitcoin rally and aSOPR reset
Notably, profits were realised throughout August as the price increased. This demonstrated underlying market strength capable of absorbing the spent coin supply.
Surprisingly, the aSOPR metric revealed that identical trend was observed following the March 2020 sell-off. The event began with capitulation, in which panic sellers realised losses over a long period of time. This was followed by a return to profitability, as indicated by the aSOPR trading and remaining above 1.0.
This implied that, while profits are being realised, market strength is sufficient to withstand sell pressure.
Finally, buyer conviction returns as the aSOPR is repeatedly reset to 1.0. It then bounces upward, implying that profitable coin holders choose to remain dormant and investors are purchasing the drop.
The calm before the storm
While the aforementioned data indicated the start of a rebound, with BTC’s price now stabilising, some uncertainty hovered over the space.
Nonetheless, a glance at BTC’s average transactions per block revealed a surge in on-chain activity. The yellow line indicated that there was more considerable flow being shifted in the last three days – a good sign for forecasts of an increase.
In fact, a CryptoQuant analyst also pointed out that the average number of tokens transferred on the chain made a new all-time high on the day when there was a large Bitcoin outflow from Coinbase.
31 BTC per transaction on average are transferred on the network. The average fee per transaction, however, was at a relatively low level, indicating a calmness before a price rise “storm” takes over.