Research has detailed Bitcoin’s recent record-low volatility and while traders expect an eventual price breakout, the Oct. 26 BTC price move to $21,000 is not yet being interpreted as confirmation that $20,000 has now become support.
In a recent “The Week On-chain Newsletter,” Glassnode analysts mapped out a bull case and a bear case for BTC.
According to the report, the bear case includes limited on-chain transaction activity, stagnant non-zero address growth and reduced miner profits present a strong Bitcoin sell-off risk but data also shows that long-term hodlers are more determined than ever to weather the current bear market.
The bull case, on the other hand, entails an increase in whale wallets, outflow from centralized exchanges and hodling by longer term investors.
Stalled new address growth
On-chain active address growth remains stagnant across the BTC network. A reduction in transactions translates to a decrease in utilization and user growth for the network, factors which could possibly hinder BTC price expansion.
New addresses within the Bitcoin ecosystem that possess a non-zero address have also plateaued, a trend which also occurred in November 2018. Stalled growth in new non-zero addresses back in 2018, was followed by a BTC price dip and did not recover until January 2019 when this metric began to increase.
Related: Public Bitcoin miners hash rate is booming, but is it actually bearish for BTC price?
Miner selling could trigger a new sell-off
In previous years, many BTC miners held on to large quantities of BTC in their reserves. However, since the onset of the bear market, many miners are selling BTC in order to cover their capital costs and operational expenses.
With BTC mining production costs are rising amid a backdrop of falling revenues, miners are deleveraging by selling their newly mined BTC. Glassnode warned that that the current:
“Deleveraging events of miners may lead to distribution into thin order books, historically light demand, and persistent macroeconomic uncertainty and liquidity constraints.”
As the price of BTC drops and miners’ profitability shrinks, miners may be forced to liquidate more of their reserve Bitcoin holdings.
Whales are accumulating
In spite of the falling BTC prices many BTC whales that hold an excess of 10,000 BTC…
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