The May 19th crypto market sell-off wiped $ 1.2 trillion from total market cap as the foam and added leverage of overvalued markets were soon removed.
Much like a forest fire pit, the devastating power of which is important in rejuvenating a forest’s ecosystem, dramatic market shocks are an integral part of the entire life cycle of a creating market as accumulated surpluses are burned and disposed of in order to pave the best way for a brand new sphere of progress.
In response to Glassnode’s findings, there was a “traditionally huge drop” in on-chain exercise the previous month, “which quickly shifted from booming on-chain economies to ATH costs, to almost completely clearing mempools and increasing demand after transactions increase “. and cut payments ”. .
This congestion helped remove the pending fees on each of the Ethereum (ETH) and Bitcoin (BTC) networks, which now returned to the $ 3 round by mid-2020 after short-term spikes of up to $ 60 by mid-2020 However, in view of the ongoing movement in value of BTC and Ether, traders may be additionally involved, regardless of whether the market has shifted from bullish to bearish or not.
The drop in exercise has resulted in a smaller amount within the total USD-denominated Switch amount processed by the Bitcoin community and a 60% lower value of the value transferred to Ethereum, the second largest lower for the networks after the 80% lower lower value. Bitcoin stands for 2017 and the 95% lower for Ethereum in 2018.
Long term owners will pile up
While movement within the chain paints a bleak picture for some as short-term homeowners have been hit hardest by the downturn, a closer look reveals that long-term homeowners (LTH) have topped up, an indication that the worst is worst could shake-out be over.
As can be seen in the graph above, availability for long-term BTC holders has accelerated upwards after a distribution segment that increased the value from $ 10,000 to $ 64,000. This increasing amount means that “LTH supply is now in a gradual upward trend” and corresponds to the development noted by the “Bull in late 2017 and the bears in early 2018”.
Glass knot mentioned:
“This fractal marks the tipping point where LTHs will stop spending, amassing, and hoarding what is now viewed as inexpensive cash.”
Additional upward trends could be in the truth that the amount of BTC currently held by LTHs is 2.3 million higher than at its inflated 2017 value, suggesting that the long-term view of these token holders means that the market is rising.
One final clue that the market may consolidate in preparation for its subsequent uptrend is the change in the liquid and illiquid supply of BTC over the past 6 months.
As can be seen in the graphic above, 160,700 BTC in the Might went back into the liquid cycle from an illiquid state, which makes up almost 22% of the total supply, which has switched from liquid to illiquid since March 2020.
This means 78% of the BTC acquired since then has not been spent, suggesting an overall bullish outlook for long-term homeowners.
While components resembling unpredictable volatility, erratic tweets from influencers, and rumors of raids by shock authorities make it impossible to ensure subsequent steps for the cryptocurrency market, knowledge of the chain suggests an optimistic long-term outlook that resumes after this Adjustment and consolidation periods are likely to decrease.
The views and opinions expressed are those of the author only and do not essentially represent the views of Cointelegraph. Every step of investing and buying and selling involves dangers and it is best to do your personal analysis whenever you make a call.