FUD affects Bitcoin transactions, but is there change in the air?
- Bitcoin’s trading activity was at a low as the market ventured deeper into uncertainty.
- There may be a new wave of accumulation on the horizon.
It’s been almost two weeks since Bitcoin’s sideways price action, which signals that the market is still in a state of uncertainty. This is because the market is waiting for a clear sign indicating the next market move.
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The extent of this outcome in the market is clearly evident in Bitcoin’s metrics. Network activity slowed down considerably in the last few days and is particularly pronounced in transaction volume. The latter is now at its lowest level in the last three years, according to the latest Santiment analysis.
? #Bitcoin's #onchain transaction volume has sunk to 3-year lows. This measures the amount of peer-to-peer payments, exchange deposits & withdrawals, & miner fees. A network activity decline isn't necessarily #bearish, but certainly indicates trader #FUD. https://t.co/0I48I4hMAJ pic.twitter.com/bTz8HgEUK4
— Santiment (@santimentfeed) August 28, 2023
Low volume translates to fewer trades/transactions; hence, miner fees have tanked. While some may see this as a source of concern, it is quite common to see periods where the level of BTC trading activity drops, leading to sideways price action.
However, that is often followed by a surge in volume and a directional price move.
Bitcoin holder accumulation suggests that volatility is incoming
Although the market remained in limbo at press time, there was one particular metric that may offer insights into the next market move. The holder growth rate has historically been a reliable measure of Bitcoin cycles.
The same holder metric recently retested the descending trend line, and was showing signs of slowing accumulation at the time of writing.
We are starting to approach the interesting part of the Bitcoin cycle.
"Hodler Growth Rate", the 1-year growth rate of 2+ year Bitcoin holders has completed the bear market rapid growth phase and is plateauing.
Look what happened every other cycle… pic.twitter.com/aUlB7LF7vP
— Charles Edwards (@caprioleio) August 28, 2023
Speaking of accumulation, Bitcoin’s mean coin age has been steadily rising and was at a 6-month high at the time of publication. This confirmed that long-term hodling was still taking place.
Meanwhile. 24-hour active addresses declined sharply since mid-August, which aligned with the aforementioned decline in trading activity.
What should Bitcoin traders anticipate as August concludes?
Bitcoin’s sideways price action is usually followed by a resurgence of volatility. We could see that happen, especially at the start of August. However, the direction of that volatility remains a mystery.
Read Bitcoin’s [BTC] Price Prediction 2023-2024
Nonetheless, Bitcoin was still oversold at press time, which suggested the likelihood that traders might buy in anticipation of a recovery.
On the other hand, the market is not out of the woods yet, especially after the U.S.’s recent statement suggesting that it might increase rates. This perfectly sums up the king coin’s stalemate and underscores the possibility of another crash.