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.
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.
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.