Bitcoin (BTC) recently broke new records by surging above $70,000. But despite this price euphoria, activity on the chain, the lifeblood of cryptocurrency, has been unexpectedly stagnant. This indicates that investors are holding their Bitcoins tightly in anticipation of higher prices. In this news article, we will examine the contradiction between the recent rise in Bitcoin price and the low transfer volume on-chain. We will also cover the possible reasons behind this recession and investors’ views on future price movements.
What is the latest situation for Bitcoin?
cryptokoin.com As we reported, Bitcoin (BTC) recently reached record highs above $70,000. However, an interesting situation hangs in the air. As the price rises, on-chain activity, the lifeblood of cryptocurrency, tells a different story. Data from Glassnode, a blockchain analysis firm, reveals a stark contrast: The average value of Bitcoin transfers on the blockchain remains significantly lower than the 2021 bull market peak. In simpler terms, fewer coins are actively moving.
Analysts at Blockware Solutions interpret this as a sign of “strong holding sentiment.” It seems that investors are reluctant to sell, anticipating further increases in prices. This “nobody wants to sell” mentality is also reflected in the low on-chain transfer volume, which currently hovers below $200,000 for the seven- and fourteen-day averages. This pales in comparison to the million-dollar-plus figures witnessed during the 2021 frenzy.
ETFs are behind the latest price rise
The recent price rise is partly attributed to Wall Street’s adoption of spot Bitcoin ETFs listed on Nasdaq. These exchange-traded funds concentrate their trading activities within the ETF framework, which further explains the decline in on-chain volume. But other indicators point to a more fundamental change. The portion of Bitcoin supply that has been untouched for three to five years continues to increase. This “hodling” behavior indicates a long-term outlook among investors who have weathered the 2022 bear market.
In fact, many analysts are predicting a six-figure price tag for BTC in the coming months, potentially exceeding $150,000. Blockware analysts believe that low volume on-chain indicates a supply-side liquidity squeeze. “When we see the price really start to move… That’s when the volume on the chain will increase,” analysts said. “Old coins will be moved to the stock exchanges to be sold.” says.
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