Every week, IntoTheBlock brings you on-chain analysis of top news stories in the crypto space. Leveraging blockchain’s public nature, IntoTheBlock’s machine learning algorithms extract key data that provide a deeper dive into the major developments in the industry.
This week we dive into recent developments affecting Bitcoin and crypto broadly. As well, we analyze essential on-chain metrics and how they are likely to be affected by upcoming events that investors should know about.
Key Bitcoin Indicators Remain Strong as Positive News Offset Decreasing Price
Crypto markets experienced the sharpest correction in a month, dropping over 10% within a few days. While the volatility may spook some investors, on-chain indicators remain strong for the most part as news point to greater potential down the road for crypto globally.
Grabbing headlines, Tesla is now officially accepting Bitcoin for payments, with Elon Musk stating that the company will be keeping the Bitcoin they receive. In potentially even bigger news, Fidelity Investments — the asset manager with $4.9 trillion in AUM — filed to launch a Bitcoin ETF as the race to release the first American-traded Bitcoin ETF heats up.
In the developing world, encouraging news came from Morocco, Turkey and Nigeria. In Morocco — where crypto transactions have been banned since 2017 — peer-to-peer exchange volumes hit new highs. In Turkey’s case, searches for Bitcoin spiked over 500% as the value of the Turkish Lira plummeted. Finally, the Nigerian central bank clarified it did not ban crypto trading despite some previous reports suggesting it had.
Despite the slew of positive news, Bitcoin and broader crypto markets retraced significantly over the past few days. However, on-chain indicators remain strong.
IntoTheBlock classifies as hodlers all addresses that have been holding an asset for a weighted average time of at least one year. Growing long-term investors suggest the belief that an asset will retain or increase its value over time, which is a key characteristic of store of value assets.
In Bitcoin’s case, the number of hodlers has grown consistently regardless of price volatility, managing to grow through the recent correction and even through the steep crash experienced in March 2020.
Along with the number of long-term investors, the total number of Bitcoin holders has also been increasing.
The total number of addresses with a balance (holders) reached a new high of 37.2 million this week. This suggests growing adoption in Bitcoin in spite of short-term price corrections.
While both of these indicators point to a positive outlook, institutional activity in Bitcoin appears to be slowing down. Large transactions volume — which IntoTheBlock classifies as the aggregate amount sent in transactions of over $100,000 — has been declining throughout the last month.
This decrease comes after multiple consecutive months of growing institutional adoption of Bitcoin. However, this is likely to continue, especially with a Bitcoin ETF potentially launching and the likelihood of more companies adding Bitcoin to their balance sheets, as renown investor Anthony Scaramucci suggested.
Overall, the outlook for Bitcoin remains strong despite the recent price correction. While market downturns are common, savvy investors should keep an eye on key indicators to spot fundamental value emerging from recent and upcoming developments.