Speculators use bounces to sell bitcoin amid weak on-chain metrics. The price is not returning to lows due to the lack of serious selling pressure, according to Glassnode analysts.
Near-term weakness continues to haunt numerous #Bitcoin fundamentals, with prices faltering below $20k late last week.
In our latest newsletter, we assess this persistent market weakness, which is putting the bulls on the back-foot.
Read our analysis 👇https://t.co/CGUvEyiNL7
— glassnode (@glassnode) August 29, 2022
Bulls are still unable to establish a sustainable uptrend due to low demand, and spending patterns indicate continued bearishness.
Hodlers remain steadfast. Glassnode is counting on reaching a range of bottom formation, as has been the case in previous cycles of downward momentum.
The seven-day moving average of the spent exit in terms of its “lifetime” (ASOL) after a recent spike (hodler spending) continues to decline. Together with the fall in the price of bitcoin, this indicates that current demand is being absorbed by supply.
The Average Coin Dormancy metric, which takes into account the amount of coins spent, shows that the recent activity of long-term investors was insignificant in volume. This confirms extremely weak demand against the backdrop of low activity of hodlers.
The seven-day moving average of the number of active addresses (excluding interconnected ones) is testing the lower limit of the bearish channel. A further decline in the metric would mean “a sad deterioration in the user base, which has not been observed for many years,” the experts emphasized.
While hodlers have reduced activity, and among speculators the position “return their money without loss” prevails (sell at a price not lower than the purchase price), market participants as a whole record daily losses of $220 million.
This is relatively modest compared to the recent capitulations, when the figure reached several billion dollars.
The return of the Net Realized Profit/Loss metric (30-day moving average) to the positive zone will be a sign of potential market strength and a recovery in demand .
The Adjusted Spent Exit Profit Ratio (SOPR) did not break the bar of 1 when the price of bitcoin was testing the $24,000 mark. Speculators are closing positions without loss or with relatively small losses. A return of the metric above 1 will confirm demand recovery.
The LTH-SOPR indicator, which filters out coins less than 155 days old, remains in the range of 0.6-0.65. This indicates the highest sales activity from buyers in the period 2021-2022. Returning a metric above 1 would be a constructive signal, but it could take months, the experts concluded.
Recall that Joshua Lim, head of derivatives at Genesis Trading, named three reasons for the weak dynamics of bitcoin.
Earlier, the founder of Look Into Bitcoin, Philip Swift, pointed to a likely drop in the price of the first cryptocurrency based on the Whale Shadows indicator.
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