Despite Crashing Under $50,000, Bitcoin (BTC) On-chain Fundamentals Showing Strength Once Again

Published May 14, 2021 | Updated May 14, 2021

In Brief
  • Bitcoin (BTC) long-term holders have started accumulating amid the recent dip.
  • The Bitcoin network registers the biggest mining difficulty adjustment in 7 years.
Bitcoin
Source: Pixabay

Despite Crashing Under $50,000, Bitcoin (BTC) On-chain Fundamentals Showing Strength Once Again

  • Bitcoin (BTC) long-term holders have started accumulating amid the recent dip.
  • The Bitcoin network registers the biggest mining difficulty adjustment in 7 years.

On Thursday, the Bitcoin (BTC) price went crashing under $50,000 levels after Tesla announced that it’s dropping Bitcoin (BTC) payments against its car purchases. Bitcoin has lost its trillion-dollar status and continues to remain under pressure.

However, there have been some positive shifts taking place in Bitcoin’s on-chain metrics despite this price crash. The Bitcoin (BTC) dormant supply increases despite the price drop, meaning long-term holders have again resolved to accumulation by buying the dips. As Glassnode reports:

“Bitcoin (BTC) supply held by Long Term Holders has returned to accumulation mode. Whilst it looks similar to the 2017 peak, HODLers today actually hold +8% more of the circulating supply in dormant wallets. Dormant supply increases, even as price dips”.

Courtesy: Glassnode

Bitcoin Exchange Outflows Continue

It looks like some of the big and smart players are grabbing this opportunity to buy BTC at lower rates. Yesterday, MicroStrategy CEO Michael Saylor announced an additional $15 million worth of Bitcoin purchases. On the other hand, Bitcoin exchange outflows continue reducing BTC supply. As reported by CryptoQuant, over 10,000 Bitcoins left Coinbase in the last 24-hours.

Also, the Bitcoin Futures perpetual funding rates have flipped across exchange turning to positive. Meaning, the long-term holders are pretty confident of Bitcoin’s price rise going ahead and have started paying the shorts.

Recently, the Bitcoin (BTC) network also witnessed one of the biggest mining difficulty adjustments in over 7 years. On Thursday, May 13, the Bitcoin mining difficulty jumped a massive 21.5% in a single day as reported by Glassnode.

All these improvements in the BTC on-chain fundamentals are a clear signal that Bitcoin is staging its recovery ahead. The Elon drop has contributed to a massive market crash with the overall crypto market losing over $300 billion. However, institutional players continue to remain net positive of Bitcoin’s future. Speaking to CNBC, BlackRock CIO Rick Reider said:

“Bitcoin is an interesting asset. It is one that has not reached maturity yet. I think it’s durable. I think it will be part of the investment arena for years to come”.

Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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Bhushan Akolkar 533 Articles
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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