Bitcoin’s Looking Less Lively These Days — and That’s Bullish

Data suggests the number of bitcoin addresses holding more than 1000 and 100 BTC has been on a six-year decline following two major peaks in 2016 and 2017

article-image

nuttapon averuttaman/Shutterstock, modified by Blockworks

share

Converging metrics of decreasing levels of activity and movement of coins by long-term holders, as well as evolving bitcoin ownership, are offering a nuanced view of market directional bias.

Liveliness measures the activity levels of holders. It increases as they liquidate their positions and decreases as they opt to accumulate more bitcoin.

Glassnode data suggests bitcoin’s liveliness has been on a consistent decline over the past two years, implying long-term holders are opting to hold onto their coins. 

Glassnode Bitcoin Liveliness

In other words, it may reflect confidence in the asset despite a period of low volatility and seemingly lower levels of liquidity.

“Persistent downtrends in Liveliness reaffirm that HODLing is certainly the current primary market dynamic across the majority of supply,” Glassnode said in its most recent weekly report.

This metric also serves as a backdrop for another significant shift in the crypto landscape: the redistribution of bitcoin wealth. 

Data suggests the number of bitcoin addresses holding more than 1000 and 100 BTC has been on a six-year decline following two major peaks in 2016 and 2017. Those holding exactly 1 BTC or above, meanwhile, are becoming more commonplace.

Observing a continued increase in holding behavior demonstrates that users prefer to hold BTC as a store of value rather than use it for transaction purposes, according to Steven Lubka, managing director at Swan Bitcoin.

“This is largely to be expected at this stage of bitcoin’s development and is positive. It shows long-term conviction in the future growth of BTC,” he said.

Glassnode Bitcoin addresses more than 100 BTC

These converging trends of decreasing liveliness and evolving bitcoin ownership may suggest a nuanced shift in market dynamics, according to Markus Thielen, head of research at Matrixport.

“We are seeing stale addresses that have been quiet for 8-12 years suddenly selling sizable holdings. This appears a moment for early adopters to sell to smallholders as the number of addresses with 1 BTC increases,” Thielen said.

Bitcoin miners have also become more cost-conscious instead of just accumulating excess inventory.

Miners, often in control over large swathes of bitcoin they accumulate, have had to better manage their costs this year as financing rates have become expensive, requiring liquidation in order to fund operations, Thielen said.

Those factors likely indicate a potential change in risk tolerance and investment strategies of market participants, whilst also hinting at the maturing and broadening appeal of bitcoin to a diverse array of investors, the research head said.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

If DeFi can just figure out how to improve both security and compliance, nothing would stop traditional finance from entering the game

article-image

Earnings from Coinbase and Robinhood boosted stock prices, while bitcoin’s open interest hits highs not seen since 2021, 2022

article-image

Ethereum Dencun will enable Ethereum transactions to be submitted as blobs, potentially alleviating the costs of posting data on the blockchain

article-image

After a rocky start, bitcoin ETF shareholders are now well in the green

article-image

Revolut said that the standalone crypto exchange is currently “invite only”

article-image

The stock price jump comes after Coinbase reported ending its seven-quarter run of net losses during the fourth quarter