Bitcoin On-Chain Analysis 2021: Massive Year of Consolidation for BTC

Bitcoin opened up with $29,000 and closed around $48,000. This is an annual increase of 65.5%. It has reached two significant peaks. The first was reached at 64 895 on April 14. 

The second was reached at 69 000 on November 10 and is the ATH. Currently, BTC’ price sits below 30% of the ATH.

Per cent Supply in Profit

Per cent Supply in Profit is an indicator that measures the number of coins whose price during the last move was lower than the current price.

At the beginning of the year, as many as 99.29% of BItcoins in circulation were in profit, and the BTC price was $29,000. Values in the 87-100% range persisted through the year’s first months until April’s ATH.

However, the subsequent drop in the BTC Price was followed by a sharp reduction in the supply in profit. At the time of reaching the summer low. Only 65.82% of Bitcoin was in profit. Further up, the chart again moved upwards to approach 100% near the November ATH.

72.79% of the supply is in profit, which is relatively low for the year(red line). Despite the BTC price oscillating around $48 000, the supply in profit indicator reaches levels from around May-July. Perhaps this is a bullish signal pointing to another period of accumulation.

NUPL

Net unrealized profit/Loss is the difference between relative unrealized profit and relative unrealized loss. It can also be calculated by subtracting the realized market capitalization from the market capitalization and dividing the result by the market capitalization.

The annual NUPL chart provides a fascinating insight into the BTC market and fits into the narrative of the long term consolidation. First of all, the indicator’s value at the beginning of the year was 0.68 (blue line), and at the end, it was 0.49 (red line). For most of the year, the indicator was in the green belief/denial range between 0.5 and 0.75.

Btc: Net Unrealized Profit/Loss
BTC: Net Unrealized Profit/Loss

Despite a 65.50% increase in the pierce of BTC, the value of NPL is down 0.19. The market has a more extensive unrealized loss today despite the price of BTC being higher than it was at the beginning of the year.

It is worth noting that the annual peak of NUPL was 0.75 on February 21 (blue circle). 

This number is crucial because all previous peaks in the BTC price have coincided with values above 0.75 in the blue euphoria/greed range. So far, this range has not been reached.

NUPL’s one year low was 0.35 on July 20 (red circle).

This remained in the yellow optimism/anxiety area despite the strong connection in the BTC price. NUPL points to the borderline value of 0.49, which was last located in September. A potential return to the green area above 0.50 will indicate the continuation of the bull market and the maintenance of the bullish long term consolidation.

BTC Supply distribution

The past year changed the ratio between LTH (long term holders) and STH (short term holders) in favour of the former. 

LTHS currently hold 13.33 million BTC, and the supply of those holding coins for more than 155 days increased by 16% year-to-date. STH held 3.01million BTC at the end of the year, and their supply decreased by 32%.

Btc Supply Distribution
BTC Supply distribution

Today, the amount of so-called sovereign supply is at a new ATH of 16.34 million BTC. In contrast, exchanges hold 2.56 million as of the end of the year.

The change in supply between LTH and STH suggests a small transfer of BTC towards long-term holders. This has been observed during bear markets, where coins move from weak hands to strong ones.

Hash rate

This is the fundamental indicator of the heath of the Bitcoin network, which measures the average number of hashes per second produced by miners.

The hash rate closes the year at a higher 168 EH/s level than it opened at 143 EH’S level on January 1. However, the health of Bitcoin’s network experienced its largest-ever drop in hash rate, which occurred between May 13 and July 2 when the hash rate bottomed out at 84. (red circle).

Despite the events in china where the mine closed, the network quickly received its mining capacity.

As recently as December, the hash rate reached a new ATH at 182 EH’s (green circle) and closed the year at 168 EH/s. Bitcoin network is in excellent shape, global decentralization and mine distribution is increasing, and miners are still interested in mining BTC.

Bitcoin Mean Hash Rate
Bitcoin Mean Hash Rate

Nothing in this article is financial advice, and you should only invest in the market you believe is suitable for your portfolio.

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Naveli Sharma