Bitcoin’s on-chain activity is mirroring patterns reminiscent of its surge to record highs in 2021, recent data reveals.
Ki Young Ju, CEO of CryptoQuant, shared insights on the 25th of August indicating a decline in Bitcoin velocity over several years.
At present price levels, Bitcoin has become relatively stagnant, with the absence of any distinct price trend over recent months leading to reduced buying and selling activity.
This inertia is emphasized by the concept of velocity, which gauges the movement of BTC units within the network.
CryptoQuant’s analysis illustrates that, when viewed on a daily basis, this metric is now at levels that were last observed back in October 2020.
The interpretation of this situation can be bifurcated, according to Ki Young Ju. On one hand, it can be construed as positive, as it signifies that larger holders, often referred to as whales, are retaining their holdings.
Conversely, it can be seen as negative since the lack of transfers to new investors could indicate a potential lack of fresh interest.
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Ki Young Ju pointed to a comparable scarcity of substantial trading activity among high-volume investors, suggesting that the market is currently adopting a “wait and see” approach towards Bitcoin.
Earlier this year, the influx of new capital into the crypto space was evident as BTC/USD initiated a winning streak during the first quarter, eventually resulting in a 70% increase.
Notably, the volume data carries added significance.
In late 2020, after hitting a long-term bottom, the rebound in this metric coincided with Bitcoin’s initial ascent beyond the $20,000 mark, ultimately culminating in new all-time highs a year later.
However, a distinction is drawn between the present circumstances and that of the past.
Bitcoin’s current price of $26,000 is marked by a state of overselling, indicated by its daily relative strength index (RSI), as measured by Cointelegraph Markets Pro and TradingView.
As previously reported, the 12-hour RSI reached its lowest point in five years this month and has yet to recover, underscoring a delay in the resurgence of investor interest.
In conclusion, Bitcoin’s on-chain activity is mimicking the prelude to its meteoric 2021 rally, with reduced movement of BTC units and a potential shift in investor sentiment indicating either a cautious optimism or a lack of fresh enthusiasm in the market.
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