Who has been impacted by the recent movements? – On-chain analysis of Bitcoin (BTC)

Bitcoin bounces off $20,000

The distribution behavior described two weeks ago has intensified, Bitcoin (BTC) price hitting the key $20,000 level before making a strong rebound towards $26,000.

The recent drop in the price did not leave market participants indifferent, especially long-term holders. The latter have clearly suffered from the fall of the market, realizing colossal losses on occasion.

This week, we continue the behavioral analysis of our previous edition with the last minute data offered to us by the BTC market.

Figure 1: Daily price of BTC

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Base costs act as support

Looking at the relationships between spot price and base costs for various participant groups over the past year, something jumps out. The Average Short-Term Holders Base Cost (STH-RP) has tended to act as resistance to the spot price throughout the 2022 bear market.

However, since breaking free from it in early 2023, this on-chain level seems to be supporting the spot price.as seen in recent price action.

This signals a key change in behavior: short-term holders, rather than selling close to their cost basis to limit risk, tend to accumulate close to it and “double down”. Such behavior indicates that the bullish bias remains largely favored and that the decline had little impact on this cohort.

Figure 2: Realized market, STH and LTH price

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Long-term holders loss taking

On the side of the long-term holders (LTH), the selling behavior has manifested itself in a pronounced way and just starting to slow down. Indeed, the loss volumes sent daily to the exchanges increase, going from 400 BTC to 1,600 BTC between March 8 and 9 and then to 1,800 BTC over the weekend.

By measuring the ratio between loss and profit volumes, we can gauge the dominance of STH take-loss via the oscillator at the bottom of the chart. VSe last indicates once more a state of loss extreme (dominance > 0.75)while the LTH cohort struggles to regain a bullish bias.

Market ends are periods of increasing risk for members of this cohort, who tend to run out of steam and make large losses as time goes by, despite initially strong conviction.

note that the conviction of some long-term holders may also have been shaken by the recent news concerning the bankruptcies of the Silvergate and SVB banksauguring a very risky contagion for the traditional financial sector.

Figure 3: LTH profit/loss volume to exchanges

Generally, the LTH cohort is still making significant losses, between -10% and -20%. Despite a noticeable improvement in their realized profitability, from -50% to almost -20% between November 2022 and March 2023, few long-term holders are currently taking profits.

This is also visible via the LTH-SOPR, which measures the profitability of spent UTXOs that are older than 155 days. This indicator provides great insight into the long-term directional bias of the marketthe neutral zone (LTH-SOPR =1) serving as the border between the bullish and bearish biases.

The failure of the LTH-SOPR to cross above 1 perfectly illustrates this difficulty of the LTHs to switch to profit takingwhile many of them are again above their break-even point (around $22,000).

While the price had climbed above this threshold for most of February, its relapse, albeit temporary, manifested significant loss taking in LTH. In order to signal the return of a long-term bullish bias, the LTH-SOPR will have to climb permanently above the neutral zone (LTH-SOPR = 1) and use it as support.

Figure 4: LTH-SOPR

This selling behavior is supported by the data in the following chart. The age bands of the volumes of BTC spent measure the relative share of the volume of expenditure of a given age group compared to the total daily volume.

By selecting volumes that are 6 months or older, referred to as ‘legacy’, we can target the spending behavior of long-term holders and observe their reaction to market fluctuations. What emerges from the study of the most recent data of this metric is that volumes of old books have indeed been spent, in an increasing manner, from the end of February.

This spending peaked on March 7, just before the price fell below $22,000, representing more than 10% of total transfer volume at that time.

Figure 5: Age bands of volumes spent

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Summary of this on-chain analysis of BTC

Finally, this week’s data suggests that BTC’s recent price rally towards $20,000 offered market participants a significant test of conviction.

On the side of the long-term holders, a substantial loss taking took placeinvolving older BTCs becoming less profitable as BTC slid over their average base price, located around $22,000.

The failure of the LTH-SOPR to cross above 1 illustrates the difficulty for LTHs to transition into profit taking, with the cohort still making losses of between -10% and -20%.

It’s a safe bet that this distribution was absorbed by strong demand at the $20,000 level.led by whales and part of the STH.

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Sources – Figures 1 to 5: Glassnode

On-chain analyst, fervent fighter of informational asymmetry.

My goal is to inform everyone about the state of Bitcoin (as an asset and a distributed network) through the prism of on-chain analysis.

Teacher. Chain

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