Bitcoin Continues to Build Large Capital Base between $32-$40K, with 15% of BTC Money Supply Moving in this Range: Report

In his latest update on the cryptocurrency markets, prominent Bitcoin investor Anthony Pompliano, has shared key insights on how China’s BTC mining crackdown has impacted on-chain metrics.

Well-known industry analyst Will Clemente has covered this week’s Bitcoin situation by looking carefully at on-chain metrics which aim to separate the “signal from the noise.”

As noted in the recap, it’s been yet another busy week of ranging for BTC, with the cryptocurrency’s price trading in this current $30,000 to roughly $40,000 range for more than 6 weeks (and counting). Clemente has taken a deep dive into this last week’s on-chain overview from June 25 to July 1, 2021.

Here are the main takeaways, as shared by Pompliano:

Bitcoin continues to “build up a big base of capital between $32K-$40K, over 15% of BTC’s money supply has moved in this current range.” Meanwhile, the mean or average daily hashrate (amount of computing power securing the BTC network) continues to trend down, “reaching the lowest it has been since late 2019 at one point; >23 minute Block intervals at one point, Issuance slowed, Difficulty adjustment coming in the next few days,” the report added.

Bitcoin miners have been found “slightly selling over the last month (assumed to be part of the China miner migration),” the report revealed while also pointing out that the younger coins “continue to sell, including the largest day of net losses in Bitcoin’s history (in USD terms).”

The report also mentioned that “still no major uptick in new whales, with retail adding aggressively” and that re-accumulation “continues,” while exchange flows sideways suggest a bullish momentum. The report further noted that stablecoins “continue to slowly flow back in” and “new users “W” shaped recovery continues, back over 36,000 new users coming on-chain a day.”

As stated in the update:

“Given the amount of time we have spent in this range, there is now a clear third zone of on-chain volume for this bull market. 15.91% of Bitcoin’s money supply has now moved in this current range.”

The report also noted that the Bitcoin hashrate continues to trend down, “with a very small bounce on Wednesday the 28th” and on the 27th it fell to the lowest levels it has been “since late 2019.” Despite some minor impacts, the network continues “to function as it always has and always will,” the report confirmed.

The report added that it’s being widely reported that Bitcoin miners have “played a big role in the price decline over the last few weeks, as supposedly miners have needed to sell BTC in order to cover the costs of migrating out of China.”

But Glassnode data reveals that crypto miners have “reduced their holdings by 5,269 BTC since May. Most of this selling came at the beginning of June and is nothing that the Bitcoin market cannot easily absorb.”

As explained in the update, “in raw dollar terms, this was the largest day of realized losses in Bitcoin’s history, outpacing the previous record set in May. In total, $4,456,786,884 of losses were realized.”

Clemente has also shared the breakdown of buy/sell behavior of “different cohorts since early June 5th to now (7/1 at time of writing)”:

  • Retail or Shrimp (0.001-1 BTC): + 4,396 BTC
  • Crab (1-10 BTC): +14,942
  • Octopus/Fish (10-100) BTC: +15,705
  • Dolphins/Sharks 100-1,000 BTC: -17,374
  • Whales/Humpbacks 1,000-10,000 BTC: -27,037

As noted in the report:

“It appears smaller entities have been buying heavily while larger entities have been trimming their holdings.”

When looking closely at the age of coins being sold (according to metrics like  coin days destroyed, dormancy, ASOL), liveliness it seems, along with the cohort data, young whales have “done most selling over the last month.”

The update also revealed that the number of new whales has “continued to trend down, something we’ve been tracking for weeks now.”

The update also noted that most of this “big w shaped recovery in new users coming on-chain is retail; given that the number of whales is trending down, retail is buying, and whales are selling.”

The report added:

“Would be fascinating to know how much of this move up is coming from Latin American countries. The network is back above 34,000 new users coming on a day. Remember, this is not addresses, but rather uses heuristics to identify entities on the blockchain.”

The update continued:

“In regard to re-accumulation, illiquid supply change is still in the green and the liquid supply ratio; created with help charting from Willy Woo; continues to trend up. These indicators both suggest the same concept, supply continues to flow into illiquid entities.”

The update said that a good way to look at what’s going on is the following: “a lot of liquid … has spilled out on the counter, the market is now slowly adding paper towels. The speed of the paper towels being added is represented by the slope in the liquid supply ratio, but as long as there is no more spill (capitulation where a lot of new supply becomes liquid), eventually the liquid (loose coins) will be absorbed by strong hands.”

The report also noted that exchange flows are now “looking sideways bullish; a change in trend from what we saw leading up to May’s big price drawdown” and this also “shows accumulation.”

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