On-chain data shows the percentage of the Bitcoin supply aged between one week and one month old has now declined to the historical bottom zone.
Only 3.8% Of The Total Bitcoin Supply Is Now In The 1 Week To 1 Month Old Bracket
As pointed out by an analyst in a CryptoQuant post, short-term buying seems to have been going down in the BTC market recently.
One way of calculating the capitalization of Bitcoin is the “realized cap,” where each coin is multiplied with the price at which it was last moved, and then a sum is taken for the entire supply.
This is different from the normal market cap, where the sum is taken after all the coins have been simply weighted against the current value of BTC.
The indicator of relevance here is the “realized cap UTXO age bands,” which tells us about the individual percentage contribution to the realized cap from the different coin age groups in the market.
In this case, specifically, the percentage of the “1 week to 1 month old” supply is considered. Here is the chart showing the trend in the contribution from this group:
The value of the metric seems to have gone down in recent weeks | Source: CryptoQuant
As you can see in the above graph, bottoms in the price of Bitcoin have historically taken place around when the percentage of the 1 week to 1 month old supply has dipped below the 4% mark.
Recently, the indicator’s value has observed a decline and it is now at around 3.8%, below this historical threshold.
The quant explains in the post that when bears are just starting, investors continue to buy without realizing a bear market is going on. However, when the bear has lasted a long time, most of these holders stop buying more.
The 1 week to 1 month old supply signifies the short-term buying taking place in the market. It declining to these lows suggests that the bear is now at a stage where most investors have stopped accumulating more.
If past trend holds this time as well, then the percentage of this supply going down into the bottom zone may mean Bitcoin could be at or near a bear bottom for the cycle.
At the time of writing, Bitcoin’s price floats around $21.8k, up 1% in the last week. Over the past month, the crypto has gained 2% in value.
The below chart shows the trend in the price of the coin over the last five days.
Looks like BTC has continued to be rangebound in the last few days | Source: BTCUSD on TradingView
Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com