Bitcoin (BTC) is exhibiting on-chain activity reminiscent of the period preceding its historic surge to all-time highs in 2021, recent data reveals.
In a post shared on August 25th, Ki Young Ju, the CEO of CryptoQuant, a prominent analytics platform, disclosed that Bitcoin velocity has reached multiyear lows.
This trend indicates reduced movement of BTC at its current price levels, resulting in a lack of pronounced buying or selling pressures.
The concept of velocity, which gauges the rate of BTC units traversing the network, highlights this stagnant state.
CryptoQuant’s data highlights that on a daily basis, this metric is currently at levels that were last observed back in October 2020.
Ki Young Ju offered a two-fold perspective on this situation.
On one hand, it can be interpreted positively as evidence of whales retaining their BTC holdings.
Conversely, it could also be perceived negatively due to the limited transfer of BTC to new investors.
This scenario extends to high-volume traders as well, indicating a subdued trading activity amongst them.
This aligns with the narrative that the market is cautiously observing Bitcoin’s movements, adopting a “wait and see” approach.
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Notably, the early months of the year witnessed the influx of fresh capital into the market, coinciding with BTC/USD’s impressive Q1 performance, achieving a remarkable 70% gain.
A significant aspect lies in the volume data. In late 2020, a similar pattern emerged where a low point in this metric coincided with Bitcoin’s surge past $20,000 and eventually reaching new all-time highs a year later.
However, in contrast to that period, Bitcoin’s current value of $26,000 seems to be oversold according to its daily relative strength index (RSI), as indicated by Cointelegraph Markets Pro and TradingView.
A recent report by Cointelegraph highlighted that the 12-hour RSI has hit a five-year low this month and is yet to recover, reflecting a delay in the resurgence of investor interest.
In conclusion, Bitcoin’s on-chain behavior is resembling the prelude to its previous historic price rally.
The slowed movement of BTC and the subdued trading activities among high-volume investors reflect a sense of caution prevailing in the market.
However, the oversold RSI suggests a potential for renewed investor engagement, albeit with a delay.
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