Bullish and bearish signs have appeared simultaneously in the bitcoin market, amid low network utilization, according to an analysis by Glassnode published on Monday 27th. Bitcoin transactions have dropped to a range of between 175,000 and 200,000 daily transactions, which is considered a «bearish on-chain activity», according to Glassnode.
On the other hand, there is a growing adoption of techniques such as SegWit, batch transactions and of the second layer network Lightning Network, which could be considered as a bullish indicator, according to the report.
The decrease in transactions adds weight to the argument that the market would be dominated by hodlers and traders, with less participation from new investors and retail traders, Glassnode notes.
As exchanges increasingly use batch transactions, in which multiple withdrawals are processed as a single transaction, Glassnode notes that the number of transactions alone can be misleading.
For this reason it is recommended to examine the number of active entities, which is shown in the next graph. Glassnode defines an entity as a unique group of associated addresses. It is appreciated that there is a drastic decrease in participants once the all-time high is reached, probably due to profit taking. After a low in July, there is a rebound in new investors in the last two months.
Another analysis on entities is based on the evolution of the net growth of It represents the difference between the number of new entrants on-chain, who begin to retain new coins, and those who leave the net. The latter sell all their currencies.
In each cycle, the net difference is measured in bearish periods. The following graph shows that the periods are getting longer and the net differences of entities is greater in magnitude in each period. In other words, although there are fluctuations in the net number of new entities every day, at the end of the period this figure is at the maximum of the range.
The first and second period lasted approximately 300 days and 3,500 days respectively, while the current one is from 2018 to 2020. Glassnode extends it to the present moment because it considers the mid-April price correction as part of the period.
Regarding the net difference of entities, there is appreciable growth in each period. At the same time the “floor” of new entities grows in each period. The company explains that this means:
Here we can see with each market cycle an increase in the ‘minimum value’ of the new entities. This describes that bitcoin reaches a wider audience over time and the size of the HODLer base that it constantly buys. We can also see that bull markets see a sharp rise in new entrants, many of whom slow down past market caps.
Glassnode.
The current market, according to Glassnode, it has returned to the upper limit of the 2018-20 bear market baseline. There are currently approximately 13,000 new entities per day , he notes.
“It is very likely that the majority of current market participants are long-term accumulators and HODLers,” the report states. However, the question arises if these categories of holders can maintain their line of action and provide sufficient purchase support.
In a Glassnode post on Twitter on the 27th, commented on by CriptoNoticias, it was they add data that complements the report. Specifically, it is noted that 80.5% of the bitcoin supply is in the hands of hodlers, or holders of “strong hands” who have little willingness to sell. 71% of the BTC held by this segment of holders is in profit.
Glassnode reflects in its report the noticeable growth registered by Bitcoin’s second layer network, Lightning Network (LN), in the month of September. The record activity of said network was due to the announcement of the adoption of the Chivo wallet in El Salvador last week, as announced by CriptoNoticias.
2.1 million people, or almost 30% of the Salvadoran population, was using this wallet that allows making payments through the Lightning Network, for September 26, as reported by CriptoNoticias.
The number of LN nodes reached a historical maximum of 15,600 last week, which is double the number of nodes in September 2020, as can be seen in the following graph.
The number of channels between different nodes on the LN also peaked at 73,000, representing an average of 4.6 channels per node, the report adds. “This is roughly double the number of channels that were live during the 2019-20 period, and most of this growth has occurred since May 2021.”
LN capacity It is also at an all-time high of 2,904 BTC, equivalent to $ 122 million at current prices. The milestone marks a 170% increase in capacity since January this year.
