Glassnode bitcoin data part 3 (14 metrics) awaits. The third and final part of this report is the On-Chain Analysis.
14 metrics for the Bitcoin
Let me remind you that in addition to the on-chain analysis, there will also be a technical part discussing the market in detail.
Glassnode: what’s the point?
Founded in 2013, Glassnode is the leading blockchain intelligence platform. We have the biggest library of on-chain and financial metrics, and provide a comprehensive and contextualized view of the crypto markets.
First part of bitcoin’s on-chain metrics
Second part of bitcoin’s on-chain metrics
HODL:
3️⃣7️⃣ Spent Output Age Bands (SOAB)
Spent Output Age Bands — Spent Output Age Bands (SOAB) aggregates spent coins into ages and presents them in color bars as a fraction of the total number of coins moved. The bars represent the percentages of spent coins created during the time period indicated by the caption.
SOAB — When you’re looking for periods or trends where older or younger coins dominate transactions, SOAB is a great tool. By looking at the age of the coins moving, we can determine whether or not long-term HODLers are influencing the market.
Cooler colors fill most of the chart area when more old coins have been spent;
In days when young coins were spent, warmer colors fill most of the chart area;
Situation as it stands:
As can be seen from the chart, long-term holders prefer to use their coins in HODL mode, indicating an increased risk of hoarding and a high level of confidence among hodlers that the asset is in a favorable price range. The market for older coins has declined substantially relative to the bull market, indicating a reluctance to spend at the current price.
On this metric, I give an 8/10 to the buyer. Bitcoin Trading
3️⃣8️⃣ HODL Waves
HODL Waves — HODL waves provide a macro view of the distribution of token supply by age and provide insight into changes in the age distribution due to token holding and spending patterns. The metric categorizes the token supply by age and displays it as a color bar whose thickness is proportional to the total token supply.
- New coins (warm tones);
- Old coins (cool);
- Lost or old coins (dark cool color);
The indicator is a solution for the distribution of coins by age groups, which allows to analyze the behavior of a certain group of holders in different market periods.
Current situation:
Currently, we can see the expansion of the darker color bands (increase in older coins), against their background, the age group and percentage of the younger coins are significantly shrinking in relation to the bull market. The number of new tokens in liquid circulation is small, but absolutely normal for a late bear market. This means that the big players are not selling, but hoarding and saving their BTC to sell when the bull market returns.
Calculation of this metric: 8/10 for the buyer. Hardware Wallet
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3️⃣9️⃣ Realized Cap Hodl Waves
Realized Cap HODL Waves — The Metric presents a macro view of the age and economic weight distribution of coin supply. The thickness of each age group is determined by calculating the total realized value of coins in each age group as a fraction of the realized value. This provides insight into the relative economic weight of coins of different ages, as well as changes resulting from holder and spending behavior.
- The Realized Cap HODL waves consider the economic weight (realized dollar value) of coin offerings in different age groups relative to the Realized Cap (total realized value of coin offerings).
- The 1 to 2 year age group with a value of 5% indicates that 5% of the realized dollar value is for coins between 1 and 2 years of age.
Current situation: Analyzing these metrics, we come to the following conclusions: the older age groups, such as 6 to 12 months, 1 to 2 years, have a large economic weight at this point. This already suggests that a substantial portion of the coins are in cold storage and are maturing to the point where the incentive to sell will be sufficient to take them out and sell them at the prices that will be in the bull market. Young coins do not have much economic weight right now, which is typical of this phase of the market, because they gain a lot of weight as the price rises in the bull market. It follows that investors with smart money are accumulating younger coins and keeping their older coin holdings idle.
The score on this metric is: 8/10 to the buyer’s side. How to Trade Bitcoin with ByBit MT4
4️⃣0️⃣ Realized Hodl Ratio
Realized HODL Ratio — This indicator aims to determine the extremes of market psychology over time to pinpoint the highs and lows of Bitcoin’s global cycle.
The realized HODL ratio is a market indicator that uses the realized HODL Cap wave ratio. Specifically, the RHODL ratio is the ratio of the 1-week and 1-2 year RCap HODL intervals. It also takes into account increased supply by weighting the ratio against the overall age of the market.
- A high indicator is an indicator of an overheated market and can be used to identify cycle highs;
- A low indicator indicates an oversold market and can be used to identify a bearish trend.
Current situation:
The current RHODL ratio indicates that we are in the end stage of a bear market, the accumulation phase. A low index value indicates that BTC is oversold. The current level of the RHODL ratio is comparable to the end of the 2015 and 2018 bear markets.
The result of this indicator is: 8/10 for the buyer.
4️⃣1️⃣ SLRV Ratio
SRRV Ratio — This ratio is called short-term to long-term realized value ratio (SLRV). Its main purpose is to detect differences in the behavior of short-term and long-term holders. It can measure the short-term and long-term trading activity of two groups of holders, and draw conclusions about which side the “smart money” is currently on.
The indicator uses 2 HODL waves with the following age intervals as input:
- 1) 24 hours
- 2) 6 – 12 months
A low ratio indicates low short-term activity and interest in Bitcoin from long-term investors and a significant increase in the number of long-term holders. Statistics show that when SLRV falls to the 0.05 level (the upper limit of the red block), Bitcoin price is in the accumulation phase of the flow cycle.
Current situation:
Analyzing the SRRV ratio data, we clearly understand that the indicator currently has a very low value and has fallen to the critical red block. This shows that long-term holders are the most active and are taking this opportunity to increase their BTC holdings as Bitcoin price is in an accumulation zone. The LTH group is currently actively absorbing the available supply, buying the new tokens, sending them to freezers and storing them, reducing the liquidity of BTC tokens and creating a shortage in the market.
The result of this indicator is: 9/10 for the buyer.
4️⃣2️⃣ SLRV Ribbons
SLRV Bands — Applying a color ramp to SLRV allows us to identify positive and negative trends that have historically driven the market between Risk-ON and Risk-OFF.
— The SLRV band is the application of two 30-day and 150-day moving averages (DMAs) to the SRRV ratio. (*To get a longer indicator, we have made some changes to the indicator, now using periods: 30 and 365. So we get smoother data without unnecessary noise). When the SLRV bars show a bullish signal (30DMA > 365DMA), it is a sign that we are exiting a period dominated by long-term holders and starting to see increased mass adoption.
— Periods where long Bitcoin holders are relatively active compared to short holders (365DMA > 30DMA) have previously been associated with accumulation zones. In the later stages of these accumulation zones, we begin to see an increase in short-holder activity, which often marks the beginning of a new cycle, as increased short-holder activity is also associated with the creation of new Bitcoin wallets.
Current situation:
We are currently seeing 365DMA>30DMA, so it is understandable that long holders are now more active than short holders, confirming that the price is in the current global accumulation phase cycle. The indicator marks the days in red, and although there is no confirmation of a change in the global trend, the two indicators are very close, which could indicate that the global trend is changing from bearish to upward.
The result of this indicator is: 9/10 for the buyer.
Long-Term Holder:
4️⃣3️⃣ Reserve Risk
Reserve Risk — Reserve risk measures measure long-term investor confidence in the market at a given time based on the ratio of selling incentives (price) to the total value of missed opportunities (opportunity cost). Reserve risk is a macro oscillator whose job it is to determine where retail investors are on the sell side and where they are on the buy side.
— A low value indicates that holders are confident in the future growth of BTC, and the lower the value of the Reserve Risk indicator, the more aggressively they increase their holdings. Absolutely low incentive to sell, as long-term investors refuse to sell their tokens at current prices in favor of long-term holdings to sell when opportunities are favorable and market demand increases (ie, they wait for a new bull market to begin);
Current situation:
Reserve risk is now near record lows, well below the key level of 0.0025. So this shows that the current long-term investors are confident in the future growth of Bitcoin, the opportunity cost (HodlBank) is high and the risk/reward ratio is very attractive from an investment point of view, which leads me to the following conclusions:
– The breeders are currently avoiding sales, they are giving up their positions and taking the side of the buyer.
Score for this metric: 10/10 for buyers.
4️⃣4️⃣ Accumulation Trend Score
Accumulation Trend Score — This indicator is designed to indicate who is behind the price action, whether it is a large player that can drive prices solidly or a smaller player that usually struggles to maintain positive price action for long periods of time.
— In general, a higher score (closer to 1) means that the big players have been accumulating over the past month, while a lower score (closer to 0) means that these big players are either selling or not accumulating.
Current situation:
A high score during such a retracement indicates that the price is close to the bottom as the big players start to stock up on what they see as a good opportunity. This build-up during a pullback is usually accompanied by a price rally.
The expected value of this indicator is: 7/10 for the buyer.
Exchange:
4️⃣5️⃣ Exchange Netflow Volume
Exchange Netflow Volume — The difference between the volume of transactions entering and exiting the exchange, that is, the net flow of coins flowing into/out of the exchange. Exchange metrics are based on tokenized exchange address data that is constantly updated by Glassnode developers, as well as data science and statistics over time. As such, these metrics are volatile – the data is stable, but especially recent data points fluctuate slightly over time. This is why we use the 30d EMA as it allows us to remove unwanted noise from the chart.
Current situation:
In about 80 days, we saw a lot of withdrawals from the exchanges. The largest exchanges with the largest token outflows are Binance and Coinbase.
Rating by this metric: 7/10 for buyers.
4️⃣6️⃣ Miner Net Position Change
Miner Net Position Change — Change the position of the miners network. This indicator provides information about changes in addresses of BTC miners.
Current situation — The negative values we see now indicate that miners are selling more BTC than they have. There is growing pressure from miners selling bitcoins from their reserves. As a result, a large number of miners gave up.
Rating for this indicator: 8/10 for buyers.
Derivatives:
4️⃣7️⃣ Futures Perpetual Funding Rate
Futures Perpetual Funding Rate — This is a mechanism used to ensure that the price of the futures contract remains close to the price of the underlying asset. To approximate the price of the underlying asset, the trader either pays against the position or gets paid from it. Payment will depend on total placement.
- For example, if most BTC futures contracts are long, then longs will pay shorts to keep the BTC price close to the index price. Conversely, if most traders are short, they will pay those traders who are long to keep the price of bitcoin close to the price of the underlying asset.
- When the funding rate is positive, users tend to open long positions and traders are generally optimistic. When the funding rate is negative, users tend to be short and traders tend to be bearish.
Current situation:
The chart using the 30-day EMA shows that the downside has started to build since the price dropped from $21,300 to $15,863. Now the funding is still negative which is very good for us because it shows that Bitcoin is oversold and it is very likely that BTC will rise in the medium term.
Rating for this indicator: 8/10 for buyers.
Addresses:
4️⃣8️⃣ Percent Addresses in Profit
Percent of Addresses in Profit — The percentage of profitable addresses. This is the percentage of unique addresses whose assets (BTC) were purchased at an average price lower than the current price. “Purchase price” here refers to the price when the currency is transferred to the address.
- Global support is 50% and below (green);
- Blocks with a global resistance of 95% and above (red).
Current situation — On the chart, using the 90d EMA, it is clear that the indicator has fallen significantly during the bear market and is approaching important support levels. Currently, the indicator has reached a value of 55%. In other words, 55% of unique addresses are profitable and 45% lose money. It is also a great signal that BTC is approaching the bottom.
Rating for this indicator: 8/10 for buyers.
4️⃣9️⃣ Whale Address Count (Balance more 1k BTC)
Whale Address Count [Balance >1k BTC] — This metric provides an overview of the number of addresses belonging to whale groups (>1k BTC) as determined by BTC coin balances. It can be used to observe and monitor macro trends for a group of “whales” that rise and fall during market cycles. It is important to note that this metric is the number of addresses and does not reflect the available supply.
Current situation — The number of addresses with BTC balances above 1k has dropped significantly throughout the bear market and is now around 1900, indicating that there are 1900 addresses with BTC balances above 1k. In a bear market, about 500 (>1k) of these addresses became unusable with a heavy read.
Rating for this indicator: 7/10 for buyers.
5️⃣0️⃣ Mega-Whale Address Count [Balance more 10k BTC]
A Mega-Whale Address Count (Balance >10k BTC) — provides an overview of the number of addresses with a BTC balance of >10k BTC. Monitoring the rise and fall of the “whale” group over the market cycle can be done with it.
Situation at present — There’s something different with addresses with balances over 10k BTC. Essentially, from the moment of peak on the bull market, until the beginning of the bear market, the index has been gradually increasing. In the bear market, it grew rapidly, showing an active increase in addresses with balances over 10 000 BTC. I think this indicates that more and more “smart money” institutional investors have begun to enter the market. As a long-time player, Bitcoin attracted more big players into the new cycle.
The score on this metric is 7/10 in the buyer’s favor.
Conclusion
According to 50 major Bitcoin On-Chain metrics, we can come to a single conclusion: Bitcoin is currently in the range of favorable price values, the ratio of risk to reward is now more attractive than ever for investors, and the opportunity cost is high. In the nascent of a new Bitcoin cycle, you need to be more daring to take the buyer’s side because an opportunity like this comes up once every 4 years.
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FAQ:
❓ What is the difference between UTXOs and on-chain transactions?
UTXOs are unspent transaction outputs and on-chain transactions are all the transactions that have been recorded on the blockchain.
✔️ How is the total value of all UTXOs calculated?
The total value of all UTXOs is the sum of the values of all the UTXOs that exist on the blockchain.