The price of Bitcoin (BTC) has recently surged to unprecedented levels, surpassing $70,000.
However, the economic activity on the Bitcoin blockchain is not progressing rapidly, but rather moving at a slower pace.
One research firm suggests that the divergence is a reflection of the market’s strong holding sentiment.
The on-chain transfer volume (USD Denominated) is currently much lower than the peak seen during the 2021 bull market. According to analysts at Blockware Solutions, there is a lack of significant value being transferred on-chain, as mentioned in the latest edition of the Blockware Intelligence newsletter. “No one is interested in selling.”
According to Glassnode, transfer volume is calculated as the total value of BTC transferred on-chain, measured in U.S. dollars. Only successful transfers are taken into account by the metric.
As of the latest update, the average transfer volume over the past seven and 14 days is currently below $200,000. This is a significant decrease compared to the levels seen during the bullish market of 2021, where it reached $1 million and even higher. This information is based on data tracked by Glassnode.
The recent surge in bitcoin can be attributed to the growing acceptance of Nasdaq-listed spot bitcoin ETFs by Wall Street. Put simply, the concentration of spot volume has been in ETFs, which is why the on-chain volume is low.
However, additional indicators suggest that investors who weathered the 2022 bear market are keeping their cryptocurrency holdings in hopes of a sustained price rally.
As time goes on, the percentage of bitcoin supply that was active between three and five years ago keeps growing. Many analysts are predicting a significant surge in the price of bitcoin in the coming months, with some even suggesting it could reach well above $150,000.
“When the price begins to show significant movement, we can expect a significant increase in on-chain volume.” Coins that have been in circulation for a while will be transferred to exchanges where they can be sold. According to analysts at Blockware, the current low on-chain volume indicates a lack of liquidity on the supply side.
At the current moment, Bitcoin is being traded at $67,700, reflecting a 5% increase over the past 24 hours.
