The number of participants in the Bitcoin market has grown since its price fell in mid-April. Around 9.6% of the coins currently held by holders are at a loss.
The Bitcoin market has shown both bullish and bearish signs amid low usage of the network, according to Glassnode. The number of transactions with the pioneering cryptocurrency has dropped by between 175,000 and 200,000 every day.
Additionally, the adoption of SegWit, batch transactions, and the second layer Lightning Network is growing. That could be an indicator of a future upward trend, according to a Glassnode report.
The argument that holders and traders dominate the market gains strength with the decrease in transactions. Now there is less participation from new investors and retail traders.
Exchanges are increasingly employing batch transactions, with multiple withdrawals processing as a single transaction. Glassnode highlights that the number of transactions alone may be misleading.
The Number of Participants Drops When Bitcoin Reaches an All-Time High
They recommend examining the number of active entities, that is, the groups of associated addresses. The number of participants drops when there is an all-time high, probably due to profit-taking. After a low in July, it is possible to observe a rebound in new investors in the last two months.
Another analysis bases on the evolution of the net growth of the entities. It shows the difference between the number of new on-chain entrants, who retain new coins, and those who leave the network. Of course, the latter have proceeded to sell all their holdings.
The first and second periods lasted around 300 and 3,500 days, respectively, while the most recent is from 2018 to 2020. Glassnode extends the latter to the present time as it considers the price correction in mid-April as part of the period.
According to Glassnode, the current market has returned to the upper limit of the 2018-20 bearish market baseline. Currently, there are about 13,000 new entities every day, they say.
Perhaps most of today’s market participants are long-term accumulators and holders. However, no one knows whether those categories of holders can maintain their line of action and provide sufficient support for purchasing.
Glassnode recently added data to complement the report, noting that 80.5% of Bitcoin’s supply is in the hands of long-term holders. Around 71% of the BTC held by that segment of holders is in profit at the moment.
Bitcoin’s Second Layer Network Is Booming
Glassnode reports the remarkable growth of Bitcoin’s second layer network, Lightning Network (LN), in September. That record network activity occurred due to the announcement that El Salvador would adopt the Chivo wallet.
Around 2.1 million Salvadorans, almost 30% of the population, used that wallet on September 26th. That device allows them to make payments through the Lightning Network.
LN nodes reached an all-time high of 15,600 in the last week, double the number of nodes in September 2020.
Channels between different nodes in LN also peaked at 73,000, an average of 4.6 channels per node. That is twice the number of live channels during the 2019-20 period, with most of this growth occurring since May 2021.
LN’s capacity also reached an all-time high of 2,904 BTC, equivalent to around USD 122 million. That milestone indicates that there has been a 170% increase since January.
By Willmen Blanco