Bitcoin on-chain metrics points to further sell-side pressure

Crypto’s medium-term market bias has been thrown back into doubt following a change in key metrics for the world’s largest digital asset, including on-chain and technical indicators.

Despite gaining more than 55% since the year began, bitcoin (BTC) continues to exhibit signs of buyer exhaustion as investor sentiment and conviction continue to fade.

An initial rally on the back of Grayscale’s small victory against the SEC to have its application for a spot bitcoin ETP reviewed by the regulator helped drive the asset above $28,000 on August 29. To some, the market is not acting as the most reliable indicator for future sentiment.

“Prices are now the same as before the Blackrock news that injected new life into BTC spot ETF chances, K33 said in a research note on Tuesday.

“In the same time span, the Nasdaq 100, often a good indicator of the market’s general risk appetite, is up 2%. The BTC spot ETFs will be huge, and with improved odds of approval, it looks evident that the market is mispricing it,” K33 said.

The outsized move late last month (6.2%) pushed bitcoin’s price back above its 200-day moving average after losing ground on August 17 (-7.1%) following a delay to several other ETF attempts.

As August headed toward its close, bitcoin dipped back below, following a sell-off on August 30 and August 31 and has remained suppressed below that point ever since.

The 200-day MA is considered a reliable indicator of an asset’s long-term trend in financial markets. Prices above the average generally signal bullish sentiment, while prices below point to a bearish mindset.

Also, total transaction volume for bitcoin reached a three-month low on Tuesday, to $811.1 million, pointing to reduced activity on the asset’s network, Glassnode data shows.

That’s coincided with a reduction in mean transaction sizes, also at a three-month low, hinting at fewer large trades, as well as the number of UTXOs now underwater reaching a three-year-high.

An eye on the long term paints a different picture. With the halving expected sometime in April next year, the amount of market participants willing to wait out the current market slump has only continued to rise.

The number of unique addresses holding more than 10 BTC rose to highs not seen since 2019, or the last four years, to 157,460. At the same time, smaller addresses holding onto 0.1 BTC reached fresh highs on Tuesday above 4.4 million, Glassnode data shows.

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