While Bitcoin’s (BTC) on-chain performance is generally positive, ARK Invest points out in its latest monthly report that two essential support levels must hold for a sustained bullish trend.
Understanding Bitcoin’s Robust On-Chain Metrics
In its report, ARK Invest argues that Bitcoin needs some upward movement to maintain its market structure. The report highlights that in August 2024, BTC’s price declined by 8.7% to $58,972. The leading cryptocurrency also struggled to surpass its 200-day moving average, making two vital support zones at $52,000 and $46,000 critical for its bullish trend.
Despite the temporary challenges Bitcoin has faced, the report indicates that its on-chain health remains ‘net positive.’ This suggests that various on-chain metrics, including network security, network usage, and holder behavior, demonstrate a generally bullish outlook for the Bitcoin network.
The supply of long-term Bitcoin holders, or BTC held for more than 155 days, has risen by 3.3% month-over-month (MoM) and shows a slight decline of 0.23% year-over-year (YoY). Additionally, Bitcoin’s locked supply has also increased by 0.58% MoM and 1.82% YoY.
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Bitcoin’s transaction volume has declined by 24.5% MoM and 2.3% YoY, indicating a bearish on-chain signal. However, the positive on-chain metrics for Bitcoin continue to outweigh the singular bearish indicator, allowing its on-chain health to stay net positive.
Another significant performance metric supporting ARK Invest’s optimistic view on Bitcoin is its short-to-long liquidation dominance. This metric compares short-term liquidations to long-term ones over the past 90 days, revealing that it has reached its lowest level since Q2 of 2023.
Many Bitcoin ETF Investors at a Loss
The report indicates that as of the end of August 2024, the estimated cost basis for U.S. spot exchange-traded-fund (ETF) investors exceeded BTC’s price, suggesting that many average ETF investors may be experiencing losses. This situation can be illustrated by the chart below.
Earlier this year, the U.S. Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs, facilitating investment opportunities in the largest cryptocurrency through compliant products for institutional and retail investors alike.
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Bitcoin ETFs are experiencing unprecedented interest from institutional investors, with financial giants like Goldman Sachs and Morgan Stanley investing millions into these products. In contrast, Ethereum ETFs have yet to attract similar levels of institutional interest.
As of this moment, Bitcoin is trading at $57,836, reflecting a slight increase of 0.2% over the past 24 hours. Its overall market cap is $1.14 trillion.
Featured image from Unsplash, Charts from ARK Invest and Tradingview.com
