At the end of last week, a phase of Bitcoin sales, which is still ongoing, started. The spent coins aged from 6 months to 5 years old are the ones that predominate.
Glassnode released a report on the activity of the Bitcoin market between August 16th and August 22nd. That study highlights the growth in the volume of futures, open interest, and contracts still pending settlement.
Medium- and long-term holders began to take profits in that period when prices broke above the psychological mark of USD 50,000. Meanwhile, open interest in options and futures in the Bitcoin derivatives market surged to new local highs.
Open interest has achieved a 56% recovery after falling from USD 27.4 billion to USD 10.6 billion in mid-April. On August 22nd, the Glassnode report recorded an open interest of USD 16.6 billion.
The study states that perpetual futures financing rates moderately tend to long positions. Those rates have remained positive from the end of July, as the Bitcoin futures markets trade above spot prices.
All that means that a large part of the market considers the price of BTC will increase in the short and medium term.
The Volume of Bitcoin Sales Increases
Profit-taking did not seem significant, but on-chain signals started among investors with older currencies who sold their BTC.
A moderate rise in sales highlighted a sharp decline in BTC inventories on exchanges late in July. In August, the balance sheet has remained stable and increased in recent days.
The moderate inflows in the last week correspond to the profit taking by traders and investors. The magnitude of those flows is similar to that of the upward phase between December 2020 and April 2021. The authors of the study highlight that it is a behavior to expect.
Identifying the Age of the BTC Spent
Using the Spent Output Age Bands metric allows identifying the groups of those holders spending their coins. Last week, older coins, especially those older than six months, recorded a peak.
The Glassnode report says that older coins reappear in two specific instances. These can be sales in a bullish market or a distribution in a context of intensive sales, like in May.
Spent outputs, aged between six months and five years, indicate that experienced Bitcoin investors and traders have already resisted volatility.
A strong rally in all age bands last week suggests that some coins took output liquidity. In May and June, the maximum amount of spent coins of different ages corresponded to price corrections.
The Bitcoin Trading Volume Decreases
The study indicates that trading volumes have decreased as there are fewer transactions and smaller amounts transferred occur. The authors add that the Bitcoin network recorded a daily volume of USD 18.8 billion last week. That represents 37% below the bubble peak of 2017 and 57.6% below that of the capitulation in May.
The settlement volume is still 276% higher than the USD 5 billion level. However, the study clarifies the price has risen by around USD 10,000 to approach USD 50,000 (+ 500%).
During the bullish market of the first half, long-term holders distributed 1.75 million BTC. That created an oversupply and led to the all-time high in price in mid-April, the report stated.
This week began with the breakout of the USD 50,000 barrier, after which a correction occurred. Increased BTC inflows on exchanges may have played a relevant role in that.
By Alexander Salazar
