Bitcoin's crash could be 'calm before the storm'(bitcoin storm)
While Bitcoin has remained locked in a somewhat narrow price corridor in recent weeks, several key metrics on the chain now indicate an overall positive trend, according to the latest weekly report published by crypto metrics platform Glassnode.
BTC miners rebound from China's ban
Glassnode pointed to the first signs of Bitcoin's hash rate recovery after China's crackdown on BTC mining, forcing local mining pools to go offline or relocate abroad. The speed at which the computing power of the Bitcoin network returns could determine whether overall market sentiment is bearish or bullish, the researchers noted.
According to the report, the hash rate of Bitcoin, the total computing power dedicated to the network, has recovered somewhat from its recent peak drop of 55% to a decrease of 39%. If the metric were to stay at this level, it would mean that nearly a third of the hash power that was affected by China's crackdown has come back online.
If the hash rate recovers quickly, it could mean that a significant number of miners have successfully relocated and / or relaunched their hardware. By extension, this would also take some of the selling pressure off them, as those miners could profit again and not worry about liquidating their profits.
At the same time, the total net position of active miners in Bitcoin is growing again, which means that they are increasing their BTC holdings at a high enough rate to offset the sales made by offline miners.
Bitcoin flows off exchanges again
Another indicator of the Bitcoin market sentiment is whether or not BTC is predominantly being deposited on exchanges or withdrawing from them. Essentially, the more BTC users move onto exchanges, the greater the likelihood that they will sell their coins, and vice versa.
In May, when Bitcoin was still trading at almost $ 60,000, we saw "a relentless depletion of exchange currency reserves, with many of them en route to the Grayscale GBTC Trust, or accumulated by institutions . "
However, after the price of BTC plummeted by roughly 50% in recent months, users began depositing their Bitcoin on trading platforms en masse, likely to sell it amid the crash, or to prepare for it by less.
That has now changed again.
"Throughout May ... a flood of BTC was deposited on exchanges, along with the market sell-off by ~ 50% ," Glassnode noted. "On a 14-day moving average basis, the last two weeks in particular have seen a more positive return to exchange exits, at a rate of ~ 2k BTC per day . "
As Bitcoin's volatility is reducing, more BTC holders are pulling their coins off exchanges without the imminent threat of a panic sale. As such, "the trades that are executed tend to represent a less speculative and more 'useful' sample compared to a sparkling bull market . "
Derivatives markets in decline
Meanwhile, activity in the crypto derivatives markets, such as futures and options, continues to decline. After a series of massive sell-offs that accompanied the crypto market crash in May, this could suggest "a decreased appetite for leveraged speculation . "
Such a significant drop in all derivatives markets lessens its impact on the price. As a result, BTC spot trading volumes are gradually regaining their role as the main driving force behind Bitcoin price movements rather than "short / long squeezes or leveraged sell- offs," Glassnode explained. https://bitcoinstormapp.net
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