Cumulative Status of Bitcoin Entry: On-Chain Data

Online chain analysis service Glassnode has released interesting data showing that Bitcoin is entering a zone of accumulation after one of the strongest waves of investment in crypto history.

Liquid supply indicator

According to the volume of illiquid supply in the chain, Bitcoin has left speculative status and now wallets are sending their funds to companies that prefer to be inactive rather than continuously making multiple transactions throughout the day.

The indicator also suggests that the 8-month cumulative distribution period during which Bitcoin hit its previous ATH levels ended in late May, with the speculation rate rising in June and peaking near September, then Bitcoin had another pump to $ 65,000 .

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The volume of the illiquid supply has reached 100,000 BTC per month, suggesting that traders are transferring more or closer than 100,000 bitcoins to dormant wallets that are known to have little or no transaction history.

This indicator also correlates with the inflow and outflow ratios of the exchange rate. As more and more traders and investors move their funds into dormant wallets, the exchange’s capital flows will decline significantly.

Does the indicator reflect the price movement?

With an indicator showing penetration into a consolidation zone, traders can expect corresponding price movements. According to the Bitcoin / USD trading pair, the correlation is actually confirmed, with Bitcoin up 6.5% over the past week.

During the speculation period, Bitcoin lost more than 38% of its value, with an illiquid supply movement falling to -130,000 Bitcoin per month. The inverted values ​​of the indicator mean that traders are moving their funds from illiquid wallets to exchanges or wallets with high trading activity.