On-chain metrics and activity for the Bitcoin network are pulling out of bear market conditions. However, the positive sentiment comes at a time when U.S. regulators are cracking down on the crypto industry.
On Feb. 21, blockchain analytics firm Glassnode reported on the state of the Bitcoin network. The findings were generally positive amid mixed sentiment over Uncle Sam’s war on crypto.
“Investor behavior on-chain appears to be reaching a turning point, hinting at a new cycle,” the firm noted.
Glassnode attributed the uptick in on-chain activity to the Ordinal inscription craze this month. As reported by BeInCrypto, Ordinals are NFTs that can be permanently stored inside one Satoshi on the blockchain. They peaked last week with more than 140,000 Ordinals inscribed on the Bitcoin network.
“Taproot usage reached an all-time high, with 8.12% of all spent outputs last week using the newest Bitcoin script-type.”
Old Hands Keep Holding
Ordinals aside, the outlet noted that the volume of transferred Bitcoin value remains extremely low. It reported that there was less than 115,000 BTC per day for coins younger than six months. This suggests that older coins are still dormant or being held.
Furthermore, the total supply younger than six months has not increased significantly year-to-date, hovering around 4.3 million BTC. The supply older than six months hit an all-time high of almost 15 million BTC as old hands keep hodling. Glassnode said that these are bear market patterns usually following a significant selloff, adding:
“This provides a gauge of periods where older hands are unlikely to spend, potentially signaling a perception that the market is oversold, at least in the near term.”
Additionally, short-term holders’ realized losses have fallen to cycle lows. “Last-gasp speculators are flushed out, and coins transfer to bottom-building buyers,” it explained. Glassnode concluded that low exchange inflows also suggest accumulation and reluctance to sell by both short-term and long-term Bitcoin holders.
“Filtering only for coins sent to exchanges, we can also see that several indicators point to a turning of the cycle and a marked shift in investor behavior patterns.”
Bitcoin Tops $25,000
Bitcoin prices briefly topped the psychological $25,000 barrier again during the morning of Feb. 21. BTC hit an intraday high of $25,075 before retreating slightly to $24,886 at the time of press.
The asset continues to build on gains despite the SEC’s war on crypto and is up 14% over the past two weeks.
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