Bitcoin on-chain indicators show that the decline is history

After a period of volatility and downturn, Bitcoin's on-chain indicators have recently begun to show a glimmer of hope. Many investors and analysts are paying attention to this trend, believing that the decline is over and the market is expected to usher in a new growth cycle. This article will take a deep look at the various indicators on the Bitcoin chain, the information they convey and the possible future direction of the market.

As a decentralized digital currency, Bitcoin's price is extremely volatile and is affected by many factors. From technical analysis to market sentiment, to real-time changes in on-chain data, investors need to interpret market signals from a multi-dimensional perspective. With the continuous development of blockchain technology, the credibility and reference value of on-chain indicators are gradually recognized and become an important basis for investment decisions.

First of all, the change of on-chain indicators is undoubtedly an important dimension for judging market trends. By analyzing indicators such as transaction volume, number of active addresses, and unspent transaction output (UTXO) on the Bitcoin chain, investors can have a clearer understanding of the actual dynamics of the market. For example, an increase in transaction volume usually indicates an increase in market activity, while an increase in the number of active addresses indicates an influx of new users and the market is gaining new vitality. These data not only reflect the current health of the market, but also provide an important reference for future price trends.

In the recent market volatility, we have seen a significant increase in Bitcoin's on-chain transaction volume. According to statistics, the average daily transaction volume has exceeded hundreds of thousands in the past few weeks, and this trend has given many investors hope. The increase in the number of active addresses is also eye-catching. Data shows that the number of new active addresses has increased by nearly 20% in just a few weeks. This phenomenon not only reflects the increase in market participants, but also means the release of market potential.

At the same time, the changes in unspent transaction outputs (UTXO) are also worth paying attention to. UTXO refers to Bitcoin transaction outputs that have not yet been consumed. The changes in its number can reflect the behavior of Bitcoin holders. Recently, the number of UTXOs has increased significantly, indicating that investors choose to hold on to their coins for a rise instead of selling them after experiencing a price drop. This "hoarding" behavior, to a certain extent, shows the market's confidence in the future performance of Bitcoin.

In addition, on-chain indicators also include the network's computing power and mining difficulty, which directly affect the security and liquidity of Bitcoin. As Bitcoin prices recover, mining activities gradually regain vitality and network computing power increases. The increase in computing power not only means enhanced network security, but also provides a guarantee for future transaction processing capabilities. This is closely related to the long-term value of Bitcoin and further consolidates market confidence.

In addition to on-chain indicators, market sentiment is also an important factor affecting Bitcoin prices. Through social media, news reports and market analysis, investors can perceive the current market atmosphere. Recently, with the positive changes in on-chain data, market sentiment has gradually turned optimistic, and many investors have begun to re-position and look forward to a market rebound. In this case, sentiment indicators and on-chain data complement each other and jointly affect the price trend of Bitcoin.

However, it is worth noting that although the on-chain indicators show positive signals, there is still uncertainty in the market. The price of Bitcoin is affected by many factors such as the macroeconomic environment, policies and regulations, and market manipulation. Therefore, investors should also remain rational when interpreting on-chain indicators and avoid blindly chasing the rise. In this rapidly changing market, prudent decision-making is the key to ensuring investment security.

In the process of personal investment, I also deeply understand the importance of on-chain data. When I first came into contact with Bitcoin a few years ago, many people were skeptical about it and thought it was just a hype bubble. However, through the analysis of on-chain data, I gradually realized the potential of Bitcoin as an emerging asset. After experiencing several market fluctuations, I learned how to use data to understand market trends and adjust my investment strategy in time. This data-based decision-making method not only makes me invincible in the market, but also makes me full of confidence in the future of Bitcoin.

In the future, with the further development of blockchain technology and the continuous expansion of application scenarios, Bitcoin's on-chain indicators will become richer and more accurate. Investors can use these data to build more scientific and reasonable investment strategies. At the same time, the maturity of the market will also attract more institutional investors to enter, further promoting the development of Bitcoin.

In short, the indicators on the Bitcoin chain show that the decline has become a historical signal, which indicates the recovery of the market and the arrival of new opportunities. Investors should keep up with market trends, make good use of on-chain data, and make rational analysis in order to seize the opportunity in this market full of variables. With the advancement of technology and the maturity of the market, Bitcoin will usher in a new stage of development, and each of us participants may become a witness and beneficiary of this process.

In this ever-changing era, only by constantly learning and adapting can you stay invincible in the wave of investment. If you are paying attention to the Bitcoin market, you might as well start from now on to gain a deeper understanding of on-chain indicators and cultivate the ability of data analysis. The future market will belong to those who can discern trends and seize opportunities.

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Bitcoin on-chain indicators suggest that the post-halving decline is over! On-chain data from blockchain analysis firm CryptoQuant shows that miners are currently holding their mined BTC, a sign that may indicate that BTC prices will continue to recover given the absence of selling pressure from large miners.
The Miner Position Index (MPI) provides insights into how changes in miners’ BTC positions affect BTC price movements. An MPI reading above 2 indicates that miners are selling their BTC after mining, while a negative MPI reading indicates that they are trying to avoid selling and prefer to accumulate BTC.
Miner Position Index (MPI) Source: CryptoQuant
The chart above shows that the MPI index is -0.59. This is a slight recovery from the yearly low of -0.79 on June 2, which indicates that most miners are not selling their newly mined BTC, but are choosing to wait for more favorable prices, which is what has been observed before.
MPI exhibits familiar behavior
In November 2018, when the BTC price dropped from $6,500 to around $3,700, miners exhibited similar behavior, choosing not to move any coins during the bear market and choosing to sell at higher points.
In May, June, and July of 2018, once BTC prices began to recover, the MPI showed positive values in all three months. The current performance of the MPI is similar to that of November 2018, which shows that miners are not in a hurry to sell BTC at current prices.
Miner Position Index (MPI) in 2018 and 2020 Source: CryptoQuant
According to CryptoQuant CEO Ki Young Ju, an MPI below -0.7 means that most miners will not sell their new tokens. Ki Young Ju explained:
“
In November 2018, the MPI index was below -0.7 and the BTC price fell. During the bad period, they did not move any BTC, and even when the MPI index reached its lowest point -1, they began to sell BTC when the bull market came. This shows that if the MPI index falls further below -0.7, most miners decide not to sell any BTC, which means that we are close to the bottom, although there may be further declines. "
Prior to Bitcoin’s halving, the MPI at similar prices was much higher, but as production costs increase, miners need higher prices to break even, which explains why some smaller miners appeared to begin capitulating in the last week of May.
MINERS CAPITULATION BUT BTC PRICE REMAIN STABLE
Data from Bytetree shows that in the last week of May, the BTC price fell below the $9,000 mark before recovering to $9,200 on May 27, which appears to have caused miners to sell more BTC than they mined.
From May 25 to May 31, miners sold 673 more BTC than they mined, causing the Miner’s Rolling Inventory Index (MRI) to rise.
) reached 111.44%.
According to Ki Young Ju, the high MRI index is the result of some miners capitulating. He explained:
“I think this is just a temporary drop as only unknown miners and small miners are capitulating at this point.”
Given that BTC prices continue to recover despite miners selling more than they mined, it appears that the sell-off is the result of inefficient miners exiting, a process that could lead to a more robust and volatile BTC market. Blockware
Matt D’Souza, former CEO of Mining, told Cointelegraph:
“After the shutdown, the Bitcoin they received will be distributed to miners with higher profit margins, higher efficiency, and more experienced miners, who will accumulate more newly mined BTC without having to sell, thus greatly reducing the selling pressure.”
This week, things are looking more positive for BTC miners, as miners sold just 108 more BTC than they mined. As of June 5, miners mined 95 more BTC than they sold.
Miner Selling BTC Inventory Index (MRI) Source: Bytetree
While on-chain data related to miners is only one piece of the ever-growing puzzle of Bitcoin’s price, efficient miners appear to be holding onto their BTC for now, as shown by the recovering MRI index.
Capitulation by inefficient miners could lead to selling pressure from more capable miners at higher price points, a factor in the low MPI currently observed.