Bitcoin prices have reached a crucial milestone in the 2021-22 cycle, hovering around the $30,000 mark, indicating a period of equilibrium and balance in the market. Several metrics associated with past cycles’ re-accumulation periods are also approaching similar levels. While inscription activity has cooled off, monetary transactions are gaining momentum once again.
According to Glassnode’s latest Week On-Chain report, Bitcoin prices have reached the mid-point of the 2021-22 cycle at $30,000. This consolidation is significant, considering the historically year-to-date solid price performance of Bitcoin.
Inscriptions on the Bitcoin network have experienced two distinct waves of activity but have significantly declined overall. Although text inscriptions dominated in terms of count, activity has been steadily decreasing since May.
However, there has been a recent increase in text inscriptions. Clearing unconfirmed transactions in Bitcoin mem pools has gradually reduced network congestion.
Bitcoin Volumes On The Rise, Signaling Positive Momentum
Bitcoin’s on-chain activity metrics require a more nuanced interpretation due to significant address re-use and small transfer volumes associated with inscriptions. As inscription activity cools off, active address momentum increases, indicating a healthy network with packed blocks.
Transaction counts also reached unprecedented levels as miners took advantage of the SegWit data discount, allowing more transaction data to fit into each block. However, daily transaction counts have recently cooled off, aligning with the slowdown in inscription activity.
While overall on-chain activity is cooling, the volumes of BTC being transferred are increasing significantly. BTC changing hands has surged 75% since the November low, reaching a daily settlement volume of $4.2 billion.
Positive momentum is observed in exchange inflows and outflows, indicating growing adoption from a monetary asset standpoint. The monthly average of exchange flows is above the yearly average, suggesting a return to the dominance of BTC monetary transfers.
A price model developed by Willy Woo, known as the NVT Price model, implies a ‘fair value’ based on on-chain volume settlement. On a short-term 28-day basis, the model indicates a ‘fair value’ of $35.9k, while the slower 90-day model also turns sharply higher.
The recovery of the Bitcoin market in 2023 has been remarkably robust, both in terms of price performance and network utilization. A firm foundation of investor holdings exists below $30k, with a significant volume of supply acquired between $15k and $30k.
The current balance of supply held in profit versus loss is at an equilibrium point similar to previous re-accumulation periods in Bitcoin’s history. This period, characterized by little macro market direction, tends to trade sideways and be volatile for several months.
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