As a seasoned analyst with over two decades of experience navigating various global financial markets, I find Ki Young Ju’s analysis compelling and well-grounded. His extensive knowledge of blockchain analytics, coupled with his keen understanding of market dynamics, makes him uniquely positioned to offer insights into Bitcoin’s on-chain behavior.
Following the stock market’s decline on Monday, questions about Bitcoin‘s prolonged upward trend have surfaced. However, Ki Young Ju, the founder and CEO of CryptoQuant – a well-known blockchain analysis company – remains optimistic. He argues that despite the recent dip, evidence from blockchain data still points towards an ongoing bull market for Bitcoin.
Bitcoin On-Chain Analysis: Bullish Arguments
#1 Bitcoin Hashrate
1. The computational power used in Bitcoin mining and transaction processing, known as the Bitcoin hashrate, is almost reaching its record high (peak value). Ju observes that miner capitulation is nearly ending since the hashrate is approaching an all-time high. US mining costs are roughly $43,000 per BTC, which suggests that the hashrate will likely remain stable unless the price drops below this level.
#2 Whale Behavior
As a researcher studying the cryptocurrency market, I’ve noticed a notable increase in Bitcoin inflows into custody wallets over the past month, which is an indication of strong accumulation by large-scale investors often known as ‘whales’. This trend is further highlighted by the growth of permanent holder addresses, with 404,000 BTC added to these wallets. Additionally, US spot ETFs have seen a significant influx of 40,000 BTC during this period, suggesting that new whales are actively accumulating Bitcoin.
#3 Retail Investor Participation
Reflecting on the current market scenario, I find a striking resemblance between the reduced activity of retail investors now and the trends observed around mid-2020. To put it simply, retail participation seems noticeably low at present. This quietness in trading could potentially lead to lower volatility, as the active involvement of retail traders is often associated with abrupt price fluctuations.
#4 Old Whales Still HODL
Over the span of three months between March and June, I’ve observed a pattern where long-term Bitcoin holders, those who’ve been in possession for more than three years, have been transferring their digital assets to newer investors. At present, there seems to be minimal selling pressure from these seasoned investors, indicating a possible shift rather than liquidation of their holdings.
Bearish On-Chain Data
#1 Macro Risks
As a seasoned investor with years of experience under my belt, I have seen my fair share of market fluctuations and unforeseen events that can drastically affect the price stability of various assets, including Bitcoin. Based on my observations and understanding of market trends, I believe it is important to acknowledge the potential macroeconomic risks that could lead to forced sell-offs in the crypto market.
#2 Borderline On-Chain Indicators
According to Ju, while certain on-chain indicators have hinted at a bearish trend, he considers them to be only slightly so. He suggests that if this bearish pattern continues for more than two weeks, the market may find it difficult to bounce back.
#3 Bull-Bear Cycle Indicator Flags Bear Phase
Significantly, the Bull-Bear Market Cycle Indicator has signaled a bearish phase for the first time since January 2023 (represented by the high blue area on the chart), making it crucial to keep a careful watch. CryptoQuant’s Head of Research, Julio Moreno, mentioned that this specific indicator had earlier flagged only a few brief bear phases during significant market occurrences such as the March 2020 COVID sell-off and the Chinese mining ban in May 2021. Additionally, it accurately predicted the onset of the bear market in November 2021.
“Although there are signs pointing towards a bearish trend, I remain cautiously optimistic that Bitcoin could reach a fresh all-time high by year-end. If the price holds above $45K, I believe it could surpass its previous record again within the next twelve months. However, certain indicators suggest a potential downturn. These could potentially bounce back with a rebound, but we’ll need to keep an eye on things if this level persists for about a week or two. If it lingers longer, the likelihood of a prolonged bear market increases, and recovery could prove challenging if it lasts over a month.”
At press time, BTC traded at $56,639.
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2024-08-07 16:16