On-chain Analyst Will Clemente Looks Into The Past Week in Bitcoin
A top on-chain analyst Will Clemente’s weekly update on Bitcoin shows similar signals as the previous week.
From an on-chain perspective not too much has changed this week aside from some continuation of trends that we’ve already been following for the last month.
We continue to carve out a fourth cluster of on-chain volume, highlighting a large cost basis of market participants between $44K-$50K. Prior to last week’s liquidation cascade we began to make a run at the final cluster starting at $54K, but got rejected just shy of the cluster at $53K.
Seeing continuation of trend in our supply shock metrics. Illiquid supply shock ratio shows another impulse to the upside, showing coins moving to entities with statistically low likelihood of selling. We also see an uptick in our highly liquid ratio, showing the movement of coins from highly liquid entities to liquid entities, or short term investors. Would like to see this continue to translate to more upside for ISSR. And third we have our exchange supply shock ratio, showing coins just continue to be pulled off exchanges. 26,148 BTC moved off exchanges this week, totaling roughly $1.25 billion at a $48K BTC price.
Looking at whales holdings, entities with over 1,000 BTC filtered for known entities such as exchanges, we can also see substantial interest from large players. Whales have now added 184,699 BTC to their holdings in the last 2 months, totaling roughly $8.8 billion at $48K BTC price. (since July 17th)
We continue to see long term holders’ increase their holdings as well, suggesting both accumulation, but also mainly coins maturing from 5 months ago as they cross the 155 day threshold. This is substantial because it means the entities currently crossing the threshold bought in right before the May 19th sell off. Continuing to see an uptrend in long term holder supply over these next few weeks would be a very positive sign, as that would mean market participants were unphased by the mini bear market that Bitcoin is clawing its way out of.
Another way to track the behavior of long term investors is to use our age related spending metrics such as SOAB, SVAB, coin days destroyed, dormancy, liveliness, and ASOL. I just decided to throw ASOL in this newsletter, but similar trends can be found in those metrics as well. They are best used in tandem however, because for example spent volume age bands tells you the actual volume of spending coming from each cohort, while ASOL is just the average age of each output. Nuance, nuance, nuance…
What we see here is that older market participants are sitting tight on their holdings, shown by the average lifespan of spent outputs declines. As a general rule of thumb, high spending from older entities is bearish, low spending from older entities is bullish.
As promised, we will touch on some derivatives related data each week to help us stay prepared for any potential short term price moves. After resetting to negative last week, funding has returned to positive, although is not nearly at levels prior to last week’s liquidation cascade. Futures open interest has recovered by roughly $1B, but still $3B from where it was prior to last week’s sell off. Something to keep an eye on moving forward of course. The futures market seems bullish but cautious.
And lastly I like to throw in a macro chart each week as a reminder to zoom out. For more macro charts see the last 2 letters we’ve put out, I just didn’t want to reuse the same charts each week. This week’s chart is looking at supply held by retail as a percentage of overall circulating supply. For reference, I define this as any entity with less than 10 BTC. What we see is that we’re starting to see a macro pattern that has taken place during each secular bull run that Bitcoin has gone through. Starting in May, the little guys have begun to stack BTC like crazy, and as Willy likes to put it, retail drives the middle of bull markets. When in doubt, zoom it out.
