Silent Bitcoin Storm: Glassnode Uncovers What Lies Beneath The Surface
August 14 2023 - 11:00AM
NEWSBTC
In the dynamic realm of Bitcoin, the ability to discern patterns
and trends from raw data is invaluable. Glassnode’s latest report,
“Exhaustion and Apathy,” serves as a beacon, illuminating the
intricate nuances of the current state of the market. Let’s delve
deeper into the numbers and their implications. Historic Lows In
Bitcoin Volatility The overarching theme of Glassnode’s findings is
the unprecedented stagnation in Bitcoin’s volatility. The data
reveals that the digital asset has been trading within a remarkably
narrow $29,000 to $30,000 range. Historically, Bitcoin has been
synonymous with volatility, making this current phase an anomaly.
The report underscores this by highlighting the Bollinger Bands’
tightness, noting, “The upper and lower Bollinger Bands are
currently separated by just 2.9%.” Such constricted movement has
been a rarity in Bitcoin’s tumultuous history. Related Reading:
Goldman Foresees Q2 2024 Fed Rate Cut: A Boost For Bitcoin?
Meanwhile, the dynamics between short-term holders (STH) and
long-term holders (LTH) offer a captivating narrative. Glassnode’s
data indicates a significant shift in wealth between these two
cohorts. The STH’s wealth has burgeoned by +$22B this year, while
the LTH has witnessed a near-identical reduction of -$21B. This
shift is not merely about numbers but also about market sentiment
and strategy. The cost basis further elucidates this dynamic. The
STH cost basis has surged by +59% YTD, settling at $28.6k. In stark
contrast, the LTH cost basis lingers considerably lower, around
$20.3k. This divergence suggests that recent market entrants might
be paying a premium, potentially due to FOMO (Fear of Missing Out)
or speculative behavior. Glassnode’s exploration into spending
patterns in this low volatility environment is also particularly
enlightening. The data suggests that in such periods, the majority
of coins moved on-chain have a cost basis that hews closely to the
spot rate, resulting in minuscule realized profits or losses. The
Sell-Side Risk Ratio, a pivotal metric in this context, is
languishing at an all-time low. To put it in perspective, fewer
than 27 trading days (0.57%) have recorded a value lower than the
current one, signaling a market teetering on the edge of a
potential volatility resurgence. Segmented View Of BTC’s Supply The
report’s segmented analysis of Bitcoin’s supply, based on ‘investor
holding time,’ offers a layered understanding of market behavior.
The ‘Hot Supply,’ representing the most active coins, constitutes a
mere 2.8% of all invested value in BTC. This suggests a market
dominated by holders rather than traders. Related Reading: SHIB,
PEPE, APE Gain Against Bitcoin, Santiment Explains What This Means
The ‘Warm Supply,’ spanning from a week to six months, has seen a
modest uptick year-to-date, now accounting for around 30% of
Bitcoin’s wealth. This segment’s behavior is crucial as it often
acts as a bridge between short-term reactions and long-term
convictions. The ‘Single-Cycle Long-Term Holders,’ those entrenched
in the 2020-23 cycle, are the behemoths, holding a staggering 63%
of the invested capital. Their cost basis, as per Glassnode, stands
at $33.8k, indicating an average unrealized loss of -13.3%. In
juxtaposition, the classic LTH cohort, which includes the
long-dormant and deep HODLed supply, boasts a cost basis of $20.4k,
translating to an unrealized profit of +43.6%. This stark contrast
underscores the lingering impact of the 2022 bear market and the
cautious optimism of early adopters. In conclusion, Glassnode’s
data-driven insights paint a nuanced picture of the Bitcoin market.
The dominance of long-term holders, the historic lows in
volatility, and the evident investor apathy all converge to suggest
a market in a state of stasis. The numbers indicate a market that’s
waiting, perhaps for a Goldman Foresees Q2 2024 Fed Rate Cut: A
Boost For Bitcoin? or a significant event, to determine its next
direction. At press time, Bitcoin was trading just above the 50-day
EMA. Featured image from iStock, chart from TradingView.com
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