On Chain Data Shows Spike In BTC Active Trading: Strength Or Weakness?
In the past month, the price of Bitcoin has mainly moved sideways despite significant developments in the cryptocurrency market. However, on chain data suggests that the current trading pattern of BTC indicates inherent strength in terms of the trader lifecycle.
According to Glassnode data, there has been a surge in the amount of supply that has been active within the last 6 months to 1 year. This metric is currently at a 6-month high level. Interestingly, this increase in active supply coincided with Grayscale winning a lawsuit against the U.S. Securities and Exchange Commission (SEC) regarding the conversion of the Grayscale Bitcoin Trust to a spot Bitcoin ETF.
A peak in the supply that has been active for over 6 months is usually associated with either a bull market scenario or a sell-off environment, indicating increased trading volume.
What Next For BTC Price?
In addition to the Grayscale lawsuit victory, there was also a significant judgment in the altcoin space involving XRP. Moreover, major financial institutions like Blackrock have been seeking approval for a spot Bitcoin ETF from the SEC. While these developments have kept investor sentiment positive, it remains uncertain how the macroeconomic environment in the United States will impact Bitcoin’s momentum.
Prior to the upcoming Federal Open Market Committee (FOMC) meeting by the US Federal Reserve, respondents on the CME FedWatch Tool predicted a 98% chance that interest rates will remain unchanged. In recent years, Bitcoin has shown high volatility around FOMC decisions due to aggressive rate hikes by the central bank. However, since the start of 2023, there has been a slowdown in this trend as optimism grows around monetary policy easing with rate cuts or pauses.
Hot Take: Bitcoin’s Trading Pattern Reflects Resilience and Potential for Growth
Despite sideways movement in its price, Bitcoin has shown strength in terms of active trading. The spike in active supply and positive developments in the cryptocurrency market, such as the Grayscale lawsuit victory and increased interest in spot Bitcoin ETFs, indicate a resilient trader lifecycle. As the United States’ macroeconomic environment continues to evolve, it will be interesting to see how it affects Bitcoin’s momentum. With the upcoming FOMC meeting and a potential easing of monetary policy, Bitcoin’s volatility may be impacted. However, the overall trend suggests that Bitcoin has the potential for further growth.
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