On-chain metrics are becoming bullish for Bitcoin and Ethereum

The central theses

  • Bitcoin has seen a significant increase in idle tokens changing hands, which can lead to high volatility.
  • The ETH supply on the stock exchanges has collapsed, while the prices are in the “opportunity zone”.
  • BTC and ETH could resume their uptrend soon if these on-chain metrics are left intact.

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Bitcoin and Ethereum appear to be subject to high volatility as several on-chain metrics suggest that buying pressure is mounting. Still, these cryptocurrencies have to overcome an obstacle in order to resume the uptrend.

Bitcoin whales are back

Bitcoin and Ethereum could be ready for an uptrend.

Bitcoin has rallied sharply after falling below $ 41,000 today. The leading cryptocurrency gained over 3,500 points after the steep correction and reached a high of 43,750 USD at the time of writing.

Santiment’s Token Age Consumed Index has seen a significant spike in idle BTC over the past few hours, which have now traded hands as prices fell.

This on-chain metric measures how many coins have recently moved addresses times the number of days since the last move. Although the movement of old tokens is not necessarily a leading price indicator, it has resulted in spikes in volatility in recent months.

If history repeats itself, Bitcoin could experience further volatility due to recent token movements.

Source: Santiment

The whales’ behavior suggests that the impending spike in volatility may be on the upside. In the past 24 hours, wallets on the network at 100-10,000 BTC have added more than 80,000 BTC to their holdings worth $ 3.32 billion.

The sudden surge in upward pressure suggests that large investors are looking to buy at a discount in preparation for an upturn.

Distribution of the Bitcoin supplySource: Santiment

Although the odds seem to speak for the bulls, Bitcoin is facing strong resistance. IntoTheBlock’s In / Out of the Money Around Price (IOMAP) model shows that 1.2 million addresses previously purchased 1.05 million BTC between $ 43,150 and $ 45,670.

These holders could try to balance their underwater positions as prices try to rise further and contain upward pressure. Therefore, only a critical close of the day above this supply barrier could signal the start of a new uptrend.

Bitcoin transaction historySource: IntoTheBlock

On the other hand, the IOMAP cohorts show that the most significant retaining wall under Bitcoin is between $ 41,830 and $ 43,000. Around 760,000 addresses hold almost 430,000 BTC at this price level. Cutting this demand zone could result in a downturn to $ 39,000 as there is no other area of ​​interest that can keep falling prices in check.

Ethereum looks undervalued

The number of Ethereum tokens held on cryptocurrency exchanges continues to decline exponentially. In the last month alone, more than 1.35 million ETH were used up by trading platforms, a decrease of 6.63%.

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The declining ETH supply on well-known cryptocurrency exchanges paints a positive picture for the future price growth of Ethereum. It technically reduces the number of ETH available for sale, which limits the downside potential.

Ethereum offering on exchangesSource: Santiment

In addition, the Market Value to Realized Value (MVRV) index suggests that Ethereum is undervalued at the current price level. This fundamental index measures the average profit or loss of addresses that have acquired ETH in the past month. Any time the 30-day MVRV falls below 0% it tends to be followed by a bullish impulse.

The 30-day MVRV ratio is now hovering at -8.6%, which indicates that ETH is in the “opportunity zone”. The lower the MVRV ratio, the more likely the price will move upwards.

Ethereum MVRV ratioSource: Santiment

Although Ethereum is sitting on weak support, transaction history shows that it only has one obstacle to overcome to resume the uptrend.

More than 1.2 million addresses have earned approximately 8.6 million ETH between $ 3,185 and $ 3,275. A crucial candle close above this resistance barrier could drive ETH towards USD 4,000 or new all-time highs.

Ethereum transaction historySource: IntoTheBlock

Still, investors need to be careful about the USD 2,900 support level as any signs of weakness could spur market participants to sell. In such unique circumstances, Ethereum could drop to $ 2,500.

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