On-Chain Data Reveals October Was Best Month For BTC Since Dec ’20
Image Courtesy of Unsplash.

On-Chain Data Reveals October Was Best Month For BTC Since Dec ’20

Long-time holders are keeping their BTC while exchanges see persistent outflows, creating strong bullish sentiment.
Neither the author, Tim fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Bitcoin experienced a historic rally in October, resulting in a new all-time high. Fueled by excitement around the launch of a Bitcoin-linked ETF, the flagship cryptocurrency gained over 40% in value and set its highest monthly close ever.

This marked the strongest month for Bitcoin price action since December 2020.

Bitcoin Looking Stronger Than It Did In May

On October 20, Bitcoin hit a new all-time high of around $67,000, marking a full recovery from a months-long slump. While the coin corrected from the highs and later dipped briefly below $60,000, it is still up by 40% over the last 30 days and shows further signs of upward momentum.

According to a report by Glassnode, a leading blockchain analysis firm, on-chain data suggests “further upside is the most probable outcome”. Contributing to this sentiment are long-time holders who are reluctant to cash out their Bitcoin holdings and take profit. Instead, they are preferring to HODL, thereby creating supply squeezes for traders looking to buy.

Despite Bitcoin trading near all-time highs, the current levels of profit taking are mild and resemble the early stages of a bull run. “It appears that current holders are by and large unwilling to move their coins here, and are waiting for higher prices,” Glassnode noted.

Image Courtesy of Glassnode.

Moreover, the total unrealized profit of all entities that have been holding coins for at least 155 days is between 0.50 and 0.75 levels, which means they are sitting on 50% to 75% net profit. Historically, this has been a pivot zone for the market. 

If holders stand firm and do not sell, this could spark a rally for higher prices. On the other hand, failing to defend this zone would result in a slump, as happened earlier this year in May. 

Image Courtesy of Glassnode.

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“Old” Coins Still Remain Inactive

Generally, as prices reach new highs, older coins come back to life and take exit liquidity to realize profits. While old coins are slowly being distributed into bull strength this time around, it is considerably lower compared to earlier this year. 

Image Courtesy of Glassnode.

Further confirming this outlook, Bitcoin balance on exchanges continues to decline. As noted by The Tokenist in early September, centralized crypto exchanges were witnessing consistent outflows. Among them, Coinbase’s BTC holdings hit a four-year low, dropping to just over 700,000 BTC. 

Now, data by Glassnode reveals that the total BTC balance on exchanges has fallen to 2.474 million BTC, returning to levels last seen in August 2018. This suggests that Bitcoin outflows have been persistent throughout the year, leaving exchanges at a rate of 20,850 BTC per month since February 2020.

Glassnode summed up the report by concluding that:

“When combining the observations of increased old coin activity with the muted levels of profit-taking covered earlier, a bullish on-chain portrait is being painted. If Bitcoin can maintain an environment of low selling, price may find itself back in price discovery before long.”

Doubling down on this bullish outlook, the quantitative analyst PlanB expects BTC to end November close to $100,000. As previously reported, $100k BTC calls are actually holding strong.

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Do you think Bitcoin will hit $100k by the year-end? Let us know in the comments below.