On-chain analysis: Declining hash rate does not slow Bitcoin growth
Today’s on-chain analysis shows a decrease in the hash rate of the Bitcoin network, which correlates with a downward trend in BTC price. However, it turns out that there are still plenty of new users taking advantage of this to get into the cryptocurrency market.
At the same time, the indicator of a change in the position of long-term owners and a decline in the supply of BTC liquidity signals a possible turnaround.
Hash rate and address loss
Since the all-time high of $ 64,800 on April 14, the Bitcoin network’s hashrate has steadily declined. The current value has reached a level not seen since May 2020 (green circle) when the BTC price was $ 9,000.
BTC average hash rate / source: Glass knot
Hence, the decrease in hashrate correlates with the decrease in BTC price. One of the reasons is also FUD related to the Bitcoin mining regulation in China and the shutdown of mines there.
We see similar behavior with the number of active BTC addresses. Here, too, there was a decline from an all-time high to a level that has not been seen since March 2020 (green circle). At the time, Bitcoin was quickly recovering from the COVID-19 crisis, with a low of $ 3,782.
Active BTC address | Source: Glass knot
Still, Willy was Woo tweet a 7-day moving average chart of business net growth that paints a slightly different picture. According to the on-chain analyst, net user growth is “stronger than ever”.
In fact, the graph shows that following the double floor in May and June, there has been a resurgence in user growth in recent days, apparently entering the market and taking advantage of the time discount point of the BTC price.
Net Growth of Bitcoin Entities (7-Day MA) / Source: Twitter
Hodler increases positions and BTC loses liquidity again
Another on-chain analyst, Yann & Jan, has published updated charts of the position of long-term owners (LTH) and the change in BTC’s liquidity supply. They provide additional arguments that current action can act to reverse a downtrend and continue a long-term bull into the future.
First of all, the chart of the positions of the long-term holders clearly shows a phase of accumulation and buying more BTC, a movement that is inversely proportional to the price of Bitcoin. LTH has not seen such a strong position increase in over a year.
Changes in the position of long-term BTC holders | Source: Twitter
Next, for the first time since the May low, the BTC liquidity supply change chart entered negative territory. This means that the amount of Bitcoin available for trading will once again drop below demand and will likely result in higher prices in the near future.
The change in BTC’s liquidity supply | Source: Twitter