Bitcoin's Market Metrics: Insights & Trends

Unrelenting Pressure in the Bitcoin Market

The "Exchange Net Flow" metric for Bitcoin, calculated using a 1-day moving average, has recently surged to an impressive $9.75 million, marking a noteworthy one-month peak. This remarkable uptick has surpassed the previous milestone of $8.89 million, which was observed back on August 1st, a development that has garnered the attention of Glassnode Alerts.

???? #Bitcoin $BTC Exchange Net Flow (1d MA) just reached a 1-month high of $9,756,459.33

Previous 1-month high of $8,892,579.21 was observed on 01 August 2023

View metric:https://t.co/IOuUPsnPKM pic.twitter.com/sVD4NmorIn

— glassnode alerts (@glassnodealerts) September 1, 2023

In terms of Bitcoin being sent to exchanges, Glassnode has reported a significant increase, with the amount now hovering close to 370 BTC, a level not seen in the past four months. 

???? #Bitcoin $BTC Exchange Net Flow (1d MA) just reached a 4-month high of 369.461 BTC

Previous 4-month high of 355.407 BTC was observed on 28 July 2023

View metric:https://t.co/YUEyldv0jg pic.twitter.com/yxHGYeG3uH

— glassnode alerts (@glassnodealerts) September 1, 2023

This particular metric diligently monitors the continuous ebb and flow of Bitcoin into and out of centralized exchange wallets. Its valuation is intricately tied to the subtraction of outflows from inflows. A conspicuously high positive value indicates an expanding reserve, potentially signaling a mounting selling force on the spot exchange.

Adding to the overarching sense of apprehension among investors is the decision by the U.S. Securities and Exchange Commission to postpone its ruling on ETF decisions originally expected on a Friday. This development has cast a shadow over traders' hopes for a sustained resurgence in the market, introducing an element of uncertainty into the equation.

As previously reported, Bitcoin has experienced a notable downturn, shedding over $2,000 from its intraweek high, which had soared above $28,000, effectively erasing all the gains that had been propelled by Grayscale.

Multi-Year Low for Bitcoin Velocity

The velocity of Bitcoin has now reached its lowest point in a span of three years, descending to levels not witnessed since the month of August back in 2020. According to data sourced from CryptoQuant, the current figure stands at 23.80, still some distance away from the historical low of 19.80.

CryptoQuant's Ki Young Ju offers two contrasting perspectives on this particular situation. On one hand, it can be seen as a positive sign, indicating that whales are holding onto their assets. On the other hand, it can be interpreted as a negative signal, as Bitcoin is not transitioning to new investors as swiftly as some might hope.

Furthermore, the Average Dormancy metric has shown an upward trend, suggesting that long-term BTC holders are increasingly inclined to sell their tokens to capitalize on potential profits. Notably, 'Dormancy' has remained at elevated levels despite a significant drop in Velocity during the 2023 rally. Even though the current price of Bitcoin remains below the all-time high reached in 2021 (ATH), it is evident that long-term BTC holders are actively seizing opportunities amid the ongoing surge and are actively reshuffling their holdings.

In summary, the market's psychology appears to be in a state of stagnation, turnover rates are on the decline, and veteran investors are tactically repositioning themselves. It seems that a robust upturn may face considerable challenges in the present environment.