Crypto News- Bitcoin Maintains Its Price; In an astonishing turn of events, Bitcoin has defied conventional wisdom, surging beyond the $26,500 threshold. This move contradicts the commonly held belief that high trading prices are synonymous with robust transaction volumes. This unexpected surge has left both investors and analysts befuddled, especially in light of on-chain data that paints a starkly different picture of decreased transaction activity.
Bitcoin Maintains Its Price Despite a 4-Year Low in Transaction Volume, According to On-Chain Data
Against the backdrop of FTX’s cryptocurrency liquidation and the U.S. Federal Reserve’s recent interest rate announcement, Bitcoin has exhibited remarkable buying support at crucial levels, as evident from its daily price chart. Despite the drop in transaction volume, BTC has maintained its upward trajectory, comfortably holding above the $26.5K mark and now targeting the coveted $27K milestone.
Glassnode’s on-chain analytics reveal a significant drop in Bitcoin’s average transaction volume, plummeting to a four-year low of $12,234. The last time it hit such depths was on January 2, 2020, when it touched $12,341. Moreover, Bitcoin’s median transaction volume has dipped to a three-month low of $67.43.
As Bitcoin displays signs of recovery, short-term investors are capitalizing on minor price surges by unloading their holdings. The short-term SOPR metric, which tracks holdings of less than an hour, has surged to a four-month high of $18,432. This suggests that Bitcoin’s recent price volatility has proven lucrative for those with short-term positions. However, the surge in short-term selling activity could potentially challenge Bitcoin’s price trajectory, as increased selling pressure may trigger a downturn.
Bitcoin’s well-known scalability issues are a source of concern, particularly with competitors offering faster and cheaper transactions. Users might consider migrating to alternative platforms for their transaction needs. The recent data presents a mixed picture for Bitcoin. While strong buying support and an upward price trend are positive signs, the low transaction volume and heightened short-term selling pressure introduce layers of uncertainty.
Bitcoin’s recent ascent toward the $27K mark is supported by compelling on-chain metrics. Glassnode reports that the number of new Bitcoin addresses has steadily increased over the past five years, recently reaching a five-year peak at 26,808. This indicates heightened investor interest in acquiring Bitcoin. Furthermore, Bitcoin’s transaction count has seen a significant uptick, reaching a four-month high of 23,724.
The surge in new Bitcoin addresses to a five-year high suggests that investor enthusiasm for Bitcoin is stronger than ever. New addresses often signify fresh entrants into the market, hinting at increased demand for Bitcoin. A sustained rise in new addresses could drive higher demand, potentially leading to a long-term bullish trend for Bitcoin, making it an even more attractive investment option with the potential to drive up its price over time.
Additionally, the exponential growth in the number of transactions suggests that Bitcoin is not merely being held but is actively used for various purposes. This could contribute to greater adoption, making Bitcoin more mainstream and potentially increasing its long-term value. However, whale activity, which often influences Bitcoin’s price volatility, seems to be diminishing according to on-chain data. Statistics indicate that the number of addresses holding more than 100 Bitcoins has dropped to a four-month low, totaling 15,968.
A decrease in the number of large holders could lead to lower liquidity, making it more challenging to execute significant trades without affecting market prices. This reduced liquidity might deter institutional investors looking to enter or exit the market with large positions, potentially limiting Bitcoin’s short-term upward price potential.
Nonetheless, with the SEC set to rule on Bitcoin ETFs on October 17, Bitcoin’s price appears to be in an accumulation phase, laying the groundwork for potential explosive gains.
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