Flagship cryptocurrency, Bitcoin has reclaimed the $50,000 trading mark as the month of October proves to live up to its name as a bullish month for cryptocurrency assets. The new price point indicates a near recovery of all the losses encountered in September where Bitcoin fell from a high of $52,850, to trade as low as $39,787, representing a 24.72% decline.
The bullish momentum in the price of Bitcoin comes from a lot of positive on-chain analytics data that points to net accumulation of Bitcoin. William Clemente, an on-chain analysts’ expert, explains that whales (big money investors) have been buying up Bitcoin since late July. He states, “Comparing the behaviour of different market participants separated into cohorts based on the size of their holdings. Whales have been buying since late July. Shrimp, crabs, fish, & octopus have been stacking harder than ever. The only cohort that has been on a decline is the 100-1K cohort, which has just recently started increasing their holdings as well.”
He further explains, “So where are those coins coming from? And who has been doing the selling over the last few weeks? The first answer is that coins have been coming off exchanges. Exchanges are down 2,869 ($134 million) this week, down 62,251 BTC ($3.2 billion) this month. At the same time, we’ve seen BTC continually locked up by entities with low spending behavioural, meaning they are statistically unlikely to sell the BTC they take in.”
On-Chain Analytics Data
The latest report from on-chain analytics provider Glassnode reveals that Bitcoin’s price has rallied strongly out of a zone of heavy accumulation, seeing around $1.75 billion worth of capital inflows per day. The report explains, “When prices consolidate in a range for an extended period, and a large volume of coins transact on-chain, this can be considered as zone of accumulation. As such we can consider this an established cost basis for many buyers.”
The report further explains, “We can therefore deduce, that alongside the $29k to $40k range in May-July, the recent lows of $40k to $41k represented a significant ‘value add’ zone for buyers who stepped in and purchased to set a price floor. A total of 86.6% of all circulating BTC are currently held at an unrealized profit.”
From the report, it uses a metric called the unrealized profit to explain that more coins are returning into profit. The report states, “This week saw a marked decline in investors spending coins that were held at a loss. Realised losses fell to a multi-week low of around $175 million per day. On the other hand, realised profits rose sharply to $996 million/day.”
The report also explains that older holders of Bitcoin have strong convictions and are not spending at current prices while young holders’ dominance is at multi-year highs which indicates the same liquid supply is transacting and likely being absorbed by new buyers.
The report also talks about the increasing interest in Bitcoin. It states, “We can also see that very large transaction sizes ($10M+) continue to dominate. Overall entity-adjusted transaction volumes have largely returned to the peak of between $13.6B and $16.8B per day. The rising dominance of large transaction sizes hints to the increased maturation of Bitcoin as a macro scale asset with increasing interest from high net worth individuals, trading desks, and institutions.”
As previously reported, Bitcoin’s hashrate has almost fully recovered from the 50% crash it experienced in May following China’s crackdown on cryptocurrency mining. The hash rate recovery means that miners will be using more computing power to mine Bitcoin. It also means that the computing power required to maintain the network is on the pathway to return to level before the China ban on cryptocurrencies. The return in hash rate also means that Bitcoin’s network integrity is very strong and almost unsusceptible to attacks.
Bitcoin is trading at $49,950, up over 5% for the day, as of the time of this writing.