Bitcoin Price Analysis

Weekly Anchin Analysis of Digital Currencies August 17 (August 26)


The bitcoin price continued to rise this week, from about $ 42,000 to around $ 48,000. The significant support market at $ 29,700 showed strong underlying demand behind this uptrend.

In its weekly intra-chain report, Golsnood examines the extraction market, capital inflows and outflows to exchanges, coin accumulation, and unrealized net profit and loss. Continue reading This analysis And through a thorough assessment of the structure of the intra-chain market, it will be examined whether we are on the verge of a bear market or in a stage of disbelief before the bull market.

The beginning of the increasing trend of miners’ income

While the wave of miners migrating from China continues, over time we see the bitcoin network hardening back from its lowest level recorded in July.

The highest recorded point for the network hardness rate before its 50% drop was 180 EH / s, which was recorded in May. This represents a huge number of miners who, under the influence of new Chinese government legislation and forced migration, have also reduced their mining power in the network.

Of course, in the last two months, with the resettlement of miners in their new positions and the resumption of work, the extraction capacity in the network has increased to nearly 25% of its lowest recorded rate, which is promising. Currently, the bitcoin mining network hardness rate is 112.5 EH / s.

Weekly Anchin Analysis of Digital Currencies August 17 (August 26)
Bitcoin hash rate

Feedback on these changes has also been reflected in the bitcoin network hardness chart, which has led to the formation of a hash-ribbons pattern. This pattern is formed when there is excitement and tension in the mining market. At the time of writing, we are witnessing a positive trend in the bitcoin mining network.

The hash bar pattern is examined in two time periods of 30-day moving average and 90-day network hardness rate, both of which indicate the upward or downward trend of miners’ income and, consequently, the price of bitcoin.

In the first case, when the 30-day moving average trend is below the 90-day moving average, it usually indicates an increase in negative pressure on miners and a drop in their income. As a result, sales pressure is created in the market, which can affect the current costs and investment of miners in this area.

The second case is the formation of a 30-day moving average above the 90-day average, which is exactly the opposite of the first case and will indicate a return of the network stiffness rate and price improvement. In this scenario, the miners start collecting the earned bitcoins, and as a result, their income will increase.
These indicators confirm that the ratio of miners’ total revenue to bitcoin and the difficulty rate in the network are proportional. It also indicates the average number of bitcoins obtained per tolerance of each miner’s network stiffness to perform the extraction process.

Weekly Anchin Analysis of Digital Currencies August 17 (August 26)
Bitcoin hash bar pattern

Due to the Hawing process in the bitcoin production rate and the reduction of miners’ income from 9.5 BTC / EH to 5.6 BTC / EH in May last year, as well as the compulsion for many active miners in China to emigrate from that country. There was a negative impact on the process of generating income and continuing their activities.

But over time, the number of miners who have been able to stay on the network is now seeing a 57 percent increase in revenue, which is a good thing for them and the bitcoin mining network.
Considering everything that happened last year and the months that followed, the last two months have been satisfactory for the miners.

Weekly Anchin Analysis of Digital Currencies August 17 (August 26)
Miners’ income per processing power

Although miners ‘net income growth last month was 5k / BTC +, it has declined from previous periods as a result of the miners’ forced selling pressure to cover their current and long-term expenses.

Weekly Anchin Analysis of Digital Currencies August 17 (August 26)
Changes in the profit or loss position of miners

Attract capital inflows

One of the most important in-house metrics for Bitcoin is the realized market value, which is equivalent to the in-market value of the market. In calculating the realized market value, the price of each coin is calculated based on its price in the last transfer, which represents the basis of the total cost of buying all the coins in the market. The realized market value can have two modes:

  • The uptrend of this criterion indicates that coins purchased at low prices are being sold, and in order for the uptrend to continue, the market must absorb and control this selling pressure.
  • The downward trend in realized market value indicates that coins purchased at higher prices are sold at a net realized loss, which is a sign of a bear market.

The realized market value started to rise from the end of July (early August) and reached a new historical peak of $ 379 billion. Assuming that the instantaneous price of Bitcoin has increased, the realized market value increase indicates that new capital is entering the Bitcoin market and the market can control the selling side pressure.

Weekly Anchin Analysis of Digital Currencies August 17 (August 26)
Realized market value

The realized net profit and loss measure shows that since the recent decline in the price of Bitcoin to the range of $ 29,000, the profit realized by the market has been between 0.5 to 1.5 billion dollars per day. This follows a long period of realized net losses from May to July, a period that indicates a possible surrender event.

Market demand attracts (buys) coins that are sold at realized profit. This is exactly what happened in November and December 2020, just before the start of the main cattle market. If the market can keep the rate of capital attraction at the same high levels, a strong foundation and confirmation will be created for the market to continue to rise.

Weekly Anchin Analysis of Digital Currencies August 17 (August 26)
The ratio of realized profit to net loss

If we look at the average value of inbound and outbound transactions to / from exchanges, we get a measure of net sales performance in the market. Before the selling pressure formed in May, both input and output metrics converged to / from exchanges to an average transaction value of $ 35,000. This level represents the average inflow and outflow to exchange offices in the first and second quarters of 2021.

Following sales pressure in May, the value of inbound and outbound transactions to exchanges fell to $ 14,000 and $ 20,000, respectively. This average volume of transactions shows that the influx of smaller traders for sale has decreased and they are now looking to buy at the price floor.

After reducing the price to $ 29,000, the average value of outgoing transactions from exchange offices returned to $ 35,000, which is a significant divergence from the average value of incoming transactions, which is $ 24,000. In general, large buyers are collecting bitcoins, and small traders are distributing coins to each other.

Weekly Anchin Analysis of Digital Currencies August 17 (August 26)
Bitcoin inflows and outflows to / from exchanges

This is in line with the criterion for changing trading positions in exchange offices, which shows that net outflows from exchange offices have been increasing since the beginning of July. Currently, between 50,000 and 100,000 bitcoins are withdrawn from exchanges every month. This number is almost comparable to the amount of bitcoins entering exchanges in the months of May to June, which was 140,000 bitcoins.

Hoodlers are back in business

As the price of bitcoin has risen, more and more coins in the cycle have entered the profit range. This gives us the opportunity to evaluate two issues; The number of coins collected in a particular price range and the motivation of the whole market to sell and make a profit.

From $ 29,000 in July to $ 47,000, about 19.2 percent of all coins in the cycle returned to profitability. This means that 3.6 million bitcoins have been spent in this price range and have an intra-chain price base in this range.

From this it can be concluded that a very large volume of bitcoins have accumulated in this price range. The increase in the number of coins in profit is much more significant than in January, when the price was in the range of $ 30,000 to $ 40,000. This shows that 1.4 million more bitcoins have been revalued since that time.

Weekly Anchin Analysis of Digital Currencies August 17 (August 26)
Percentage of coins in profit from total supply

The Net Profit or Loss (NUPL) measure provides a cyclical oscillator that shows the amount of unrealized profit or loss as a ratio of total market value. The NUPL criterion has just passed 0.5 points, indicating that more than 50% of the coins in the cycle are in unrealized earnings.

Historically, the value of 0.5 units for NUPL occurs after two criteria have been modified:

  • Slight upward correction in bear markets, such as what happened in 2014, 2018 and to some extent in 2019.
  • The trend of disbelief is in the uptrend in which after the NUPL criterion reaches 0.5, a moderate correction occurs and then the uptrend continues. In small upward corrections in bull trends, similar behaviors occur with the sale of coins, and investors save their profits. The difference between the two is that in bullish markets, the trend continues after the price correction and more buying pressure is created by the fear of staying (FOMO).
Weekly Anchin Analysis of Digital Currencies August 17 (August 26)
Profit to net loss ratio not realized

Finally, the STH-NUPL standard, which filters NUPL only for short-term hoodlers, has returned to profitability. This shows that currently the price of coins that have been transferred in the last 5 months is slightly higher than their base purchase price. This is unusual for the STH-NUPL standard like the standard NUPL standard, but usually occurs before explosive movements in the bear or bull market.

Weekly Anchin Analysis of Digital Currencies August 17 (August 26)
NUPL standard for short-term hoodlers

Conclusion

With the body of evidence presented about the increasing trend of miners’ incomes, inflows and outflows of capital to / from exchange offices, and the relatively large accumulation of coins by large investors, it can be said that the current situation shows a stage of disbelief in the cattle market.

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