The strangest bear market in history is unfolding in front of our very eyes. Even while the death spirals and Chapter 11 bankruptcies that triggered it seemed to come out of nowhere, it appears that most individuals were prepared for it.
In any event, all of the coins are in the red. Fear, uncertainty, and doubt should pervade the market. That is not the case for the two most popular cryptocurrencies. Although the conditions are different in each case, both markets exhibit signals of unshakeable confidence. It truly is the strangest bear market in history.
Long-term investors of Bitcoin and Ethereum appear to be smiling in the face of the bear market. In the most recent issue of The Wolf Den, the author utilizes data from Glassnode and Intotheblock to demonstrate how this is true.
The Bear Vs. Bitcoin
“On-chain evidence from Glassnode suggests that there has been no meaningful reduction in the conviction of long term believers,” the newsletter stated.
The Wolf Den examines the “Dormancy Metric” to demonstrate this. The figure “records the average age of every Bitcoin that moves, as calculated by the date it was mined.” The average age of coins circulating across the market is one approach to evaluate the mood of long-term holders.”
As astute readers may have guessed, the coins “floating around the market” are quite young. Their age, in fact, “is at multi-year lows.” “The dormancy value is really low.” This is similar with prior bear markets, which had low dormancy levels. Glassnode analysis is cited in the newsletter:
“The decline in lifespan metrics actually bodes well for the longer-term, as it indicates old coins are stationary, and declining prices have little psychological impact on this cohort’s conviction.”
So, if we look at the broad picture, everything appears to be in its proper place. A good habit to have during bad markets.
ETH Merge Is Upon Us
The Wolf Den uses data from IntoTheBlock for this part. Before proceeding, the author defined the sequence of events that constitute the fabled “merge.” First and foremost, “the Bellatrix upgrade occurs on the Beacon chain” on September 6th. Then, from September 10th to September 20th, “the official transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) will take place.” The Ethereum Foundation expects the merger to take place on September 15th.
The Wolf Den investigated “netflows onto centralized exchanges” to assess the condition of the Ethereum network during this bad market. Overall, more ETH is leaving than entering exchanges, which is positive. It usually indicates that people are not looking to sell their possessions. However, with the merger approaching and the bear market in full swing, it may have other connotations.
On the one hand, people may be “bullish on the merge because users believe the merge will be successful and are stockpiling ETH for potential price action.” On the other hand, they might be anticipating an ETH Proof-Of-Work hard fork. If this occurs, “all ETH kept in wallets can claim ETHW at a 1:1 ratio, traders may be planning to claim the most ETHW feasible.”
This is another intriguing aspect of the present bear market. “The average inflow transaction size has recently been bigger than its outflow counterpart.” The Wolf Den claims that this isn’t a concern because “netflows onto centralized exchanges” are low. That is a more powerful indicator. However, such massive influx transactions may point to something worthwhile. “Larger traders and institutional investors are more doubtful about the merger’s success.”
In any event, long-term Bitcoin and Ethereum holders remain steadfast despite the bear market’s circumstances. For quite different reasons.
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