In today's weekly article, I am going to be looking at the on-chain movement for Bitcoin over the past week and the potential implication of some of the heavyweight on-chain metrics showing substantial movements.
Before I try to diagnose the on-chain changes that have occurred recently I think it's important to quickly discuss the backdrop that Bitcoin is currently against.
In no particular order, here is a list of pending price catalysts:
SEC Vs Ripple legal case
New SEC ETF applications
August 13th ETF decision by the SEC on 21Shares and Ark Invest
SEC crypto framework
U.S. economic data points (to potentially determine the Fed's next move)
As you can see by the above list crypto traders have many things on their minds currently and this is one reason why volatility is extremely low, especially in the spot market.
In theory, confirmation of the Fed ending the rate hike cycle should lend support to the price of Bitcoin. If aided by a positive outcome from one of the other catalysts on the above list Bitcoin could easily set a new yearly high.
On the other hand, if data points point to the Fed continuing to hike rates, plus we see a negative outcome from the SEC cases or indeed the August 13th decision then we could see all of Bitcoin's July price gains wiped out.
Looking on-chain and Bitcoin there have been some major movements this week.
Starting with BTC Token Age Consumed, this week we saw the largest spike this year and the second largest spike over the last 12 months.
Typically this would allude to a monster price move incoming.
Despite the exciting spike, one of the major issues I have right now is that Daily Active Address Activity is low still. Check out the nasty red flows below.
We also saw huge movement in 365-day Dormant Circulation.
This can be both bullish and bearish as seen on the chart below. Major bull and bear runs started when these spikes happened previously.
Short-term holders are also moving their coins. Check out the huge uptick in activity from 90-day holders.
One potential positive metric is the recent downtick in Network Profit and Loss. Such downticks have previously led to major price pumps.
The theory behind this metric working is traders taking a loss or exiting at exactly the wrong time.
Then we come to Volume. Check out the huge spike in Volume this week.
It would certainly suggest that the market knows something we don't, especially if we combine all the metrics mentioned today and the unusual movements.
Santiment.net
Whale data is extremely lagging and far from encouraging at this stage and it is not consistent with a big up move coming. No signs of accumulation yet.
Looking at Bitcoin's on-chain data this week most of the heavyweight indicators are suggesting a major price move is imminent.
The trick is of course working out which way Bitcoin is going to break based on these outlier spikes.
The charts clearly show the $34,500 level as the next major bull target if we see a positive outcome, if not then we could see a very nasty price retracement down towards the $22,800 level.
Bitcoin does have a nasty tendency to make a sudden post-halving drop prior to rallying, however, I still favor $42,000 being hit before $22,000.
