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These are the bitcoin metrics that would support a bull run, according to Glassnode

The analytical firm Glassnode considers that the behavior of the so-called on-chain entities, and the retention of bitcoin (BTC) by long-term holders, are two of the main factors that can drive a probable upturn in the price. The analysis of these metrics, together with other indicators of the Bitcoin network, is part of the report Week On-chain # 29, published this Monday, July 19,

Glassnode defines an entity as a unique group of associated addresses . “If a group of addresses interacts and shows heuristic signs suggesting a single owner, those addresses are classified as a single entity,” states the report.

In the graph below, Glassnode presents three metrics that , in their opinion, they offer a comprehensive overview of the on-chain entities.

The former are the sending entities (green) associated with the destruction of UTXO. Most wallets enforce single-use addresses when spending, which typically lowers the entity count, the report says. “Currently, we see fewer spending entities that indicate lower UTXO spending and a preference for HODLing,” the study concludes.

The receiving entities (pink) are the opposite. This means there are new owners and new build-up, the authors claim. In June and July there has been strong growth in the receiving entities, according to the report.

The net growth of entities (blue), finally, take the difference between entities ‘destroyed’ and ‘created’. Since “entities destroyed” are decreasing and “entities created” are increasing, we have “positive aggregate net growth.” In short, there is more HODLing and less expenses , which probably reflects a similar environment to accumulation.

Net change in on- chain. Source: Glassnode.

The study supports this observation of the net growth of entities, showing the change of the net flows of bitcoin in the exchanges, “that has reverted to outgoing flows of BTC, after a significant period of inflows. Exchanges are currently registering net outflows of 36,300 BTC per month ”, the report concludes.

Inbound flows of BTC to exchanges have reversed, says Glassnode. Source: Glassnode.

The miners, on the other hand, are showing extreme resilience and a desire to accumulate, according to the report, despite the large expenses caused by the so-called “great migration” . This expression refers to the transfer of miners from China to other latitudes, due to government restrictions, as reported by CriptoNoticias. “It is possible that the additional sales pressure of the miners that have been disconnected, has been overcome by the extraordinary profitability of the miners that remain operational,” says the study.

Miners begin to accumulate again (green bars). Source: Glassnode.

Long-term bitcoin holders profit and loss

Based on the volume of BTC supply in the hands of long-term holders (LTH ), also cataloged as ‘strong hands’, it can be seen that HODLing seems to be the preferred strategy , says the report. “Long-term holders currently own 75% of the current supply. 6% of these funds have losses and 69% are still with profits ”, say the authors.

6% of the supply in the hands of long-term holders is currently in loss. Source: Glassnode.

The authors state that the upward pressure that began in the bull markets historically, has been caused by LTH that owned 65% (2013), 75% (2017 ) and 80% (2020) of the circulating supply, in the respective cycles.

Changes in supply bitcoin illiquid

The growth of supply in the hands of LTHs is consistent with the change suffered by illiquid supply , according to the study. In May, the intensive sale of BTC began, as shown by the area in red, to decrease for much of June. Then, as the area in green shows, an accumulation period begins, with few expenses.

After the intensive sales of May (red), accumulation is restarted (green). Source: Glassnode

The highs in the green areas reveal the increase in retention, while the lows occur when illiquid currencies return to circulation, that is, to liquidity, says Glassnode.

HODL waves of effective capitalization

Glassnode uses HODL waves of effective capitalization “to round the bullish case for Bitcoin”, as they show unmistakable indicators of retention and currency maturity, according to the study. “They show more evidence of the likelihood of a possible reduction in supply,” say the authors.

The “effective capitalization HODL waves” are, according to Glassnode, another bullish indicator of the price of bitcoin.

The study stands out for a part that, for several months , the younger bands of coins (red-orange) are reduced, as they constitute a smaller proportion of the «realized value». This occurs when young coins mature and age to become older coins , creating an enlargement of the older coin bands (yellow, 3m-12m) in the hands of the LTH.

Glassnode has not only presented bullish indicators. In the first part of this report, published by CriptoNoticias last Tuesday, July 20, Glassnode addresses the bearish metrics that could affect the price of bitcoin.

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Sandra Loyd
Sandra is the Reporter working for World Weekly News. She loves to learn about the latest news from all around the world and share it with our readers.

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