Bitcoin is in a bear market, but not completely desperate yet
With every day that goes by, Bitcoin becomes less and less likely to have a bull market. As mentioned earlier, price action is different from any previous bullish pattern, and now even on-chain indicators negate any possible recovery move. Coupled with a decline in Bitcoin futures volume, these developments can be viewed as major difficulties. However, the trend can be reversed if things go in such a way that certain metrics drive the market.
There is no need to overestimate, just one look at the numbers and watching the market is enough to see how far the bull market is from today. The first clue comes from the NVT rate.
Yesterday the indicator hit a 9-year ATH at 42.6. Even if it sounds positive, the NVT ratio is often a sign of a future turnaround. In the past, such highs resulted in equally sharp price drops on the chart.
NVT rate at 9-year high | Source: Glassnode
In addition, a sharp decline in the number of transactions can also be taken into account here. Since the beginning of February 2021, falling numbers have pushed the 30-day average to a three-year low. This level last occurred in August 2018.
Number of Bitcoin Transactions | Source: Glassnode
The net result chart also shows that losses dominate. The movement of the indicator remains near the all-time low on June 12th. This says a lot about the current market conditions. Until that line turns green, the win looks like a distant story.
Real net profit / loss | Source: Glassnode
The MVRV quota can also be taken into account, especially since it contributed to the losses mentioned. Put simply, MVRV shows the profit investors make relative to the value of BTC. The index currently stands at 1.7, which is the same as the October 2020 numbers. Needless to say, the Bitcoin market is having better days.
MVRV rate in October 2020 | Source: Glassnode
Not completely desperate yet
This is also true as several key indicators show signs of a possible bullish reversal if their moves continue.
At the top of this list is the reserve risk indicator. The yellow line moves closer to the green zone. This buy zone is considered very positive for the market as it underscores the growing confidence that investors have in the asset.
Risk reserve is approaching buy zone | Source: Glassnode
This is also due to the fact that the number of active addresses has grown well after falling to a two-year low on June 27th. Yesterday the number of active addresses rose by 100,000 and reached the 821,000 mark.
Active bitcoin addresses | Source: Glassnode
Despite all of these signs, Bitcoin and market volatility can change direction at any time. That is probably the only certainty there is on the market today. Therefore, it is necessary to constantly update the situation if you want to invest.
Bitcoin futures in trouble
The futures market took a surprising hit this week. While volatility is not uncommon in the futures market, these circumstances are currently having a significant impact on short-term prices. The trading volume has been decreasing continuously since May ATH. Towards the end of last week, the open interest (OI) of futures contracts dropped between $ 13 billion and $ 10.7 billion.
That’s a 57% decline since futures volume hit ATH in April.
Open interest in Bitcoin futures drops 57% | Source: Glass knot
In addition, futures volume is also falling, reaching near the lowest level the indicator has fallen this year. With a daily volume of $ 45 billion, the metric appears to be closer to February’s $ 38,000, so the current volume is 62.5% and 49% lower than when it was first surrendered (May), Dec.
Bitcoin futures volume decreases | Source: Glassnode
Eventually, open interest in options in the derivatives market fell 67% from a high of $ 13.2 billion to $ 4.4 billion. Such a decline could signal impending volatility driven by spot rather than leveraged liquidation.
Open interest in Bitcoin options drops 67% | Source: Glassnode
HODL wave charts provide information about Bitcoin holders of different ages and their current behavior. Overall, the ASOL indicator shows that older coins are slowly gaining the upper hand. The 2-3 year old owners now hold 9.8% of the offer. In addition, the 3 to 5 year band accounts for 13.1% of the supply. The holdings of 1-2 year old holders have dropped to 13.3% and the younger coins from 6 to 12 months (buyers in this bull market) hold 9% of the supply.
Wave HODL Bitcoin – coin 2 years – 5 years | Source: Glassnode
Wave HODL Bitcoin – Coin 6 Months – 2 Years | Source: Glassnode
After all, the youngest coins, aged 1 to 6 months, rose from 22% to 32% at the time of the ATH in May, but their share of the total supply is also decreasing.
Wave HODL Bitcoin – coin 1 week – 6 months | Source: Glassnode
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