Bitcoin Consolidates as Profitability for Long-Term Holders Increases

Last week, Bitcoin (BTC) concluded at approximately $37,350, posting an increase of 0.8% compared to the preceding week’s closing value of $37,000. It commenced with notable volatility, witnessing BTC’s price dropping to as low as $34,800 on Tuesday, followed by a robust recovery, nearly reaching $38,000 on Wednesday. Subsequently, BTC dipped again to $36,000 on Thursday. The latter part of the week saw an uptick, and BTC closed the week at around $37,350.

BTC dominance, which gauges Bitcoin’s market capitalization in relation to the entire digital asset market, rebounded after two consecutive weeks of decline, settling at approximately 52.6%. This represents a 0.3% increase compared to the prior week, indicating a deceleration in the dispersion of liquidity across the market following two weeks of robust momentum in the altcoins sector.

The recent increase in altcoins’ performance is corroborated by an analysis of the Total3 metric, considering the total market capitalization of the top 125 altcoins. This metric presently stands at around $416.1 billion, marking the highest level recorded since August 2022. It underscores the substantial positive momentum in the overall market, following a robust surge led by Bitcoin and the ETF Spot narrative in recent months, bringing the market capitalization close to levels not observed since the UST-Luna collapse that triggered a significant downturn in early May 2022.

In affirmation of the uptrend, several BTC metrics exhibit strong momentum. Presently, about 80% of the addresses holding Bitcoin are in profit, illustrating the robust accumulation during the 2022 downturn. Only roughly 20% of addresses have an average purchase price exceeding $37,000, affirming the high probability of a bottom being formed during 2022. This accumulation by long-term holders from short-term holders is typical in the latter stage of a bear market, where cycle bottoms are established. This is further supported by the BTC supply that has not moved in the last 12 months, currently accounting for 70.2%, indicative of the long-term commitment of most investors. Additionally, the Bitcoin Illiquid Supply metric, measuring the supply held in wallets with minimal spending history, has reached an all-time high of 15.4 million BTC. This aligns with the earlier assumption, depicting a recent surge in long-term holders who did not sell their assets during the 2022/2023 downturn but instead continued accumulating, demonstrating minimal activity associated with selling BTC in their wallets.

Examining BTC on-chain activity reveals positive trends. Daily transactions, calculated on a 7-day average, approached almost 575,000, and the total volume of BTC on-chain transactions is at levels not witnessed since the end of June. Transaction fees remain relatively high at $4 to $5, showcasing an overall uptrend in on-chain activity, extending beyond centralized exchanges and financial products. This suggests a harmonious growth in structural activity and interest across various investor cohorts.

Turning attention to mining, recent reports indicate that Tether, the issuer of USDT, plans to invest $500 million in mining, aiming to acquire approximately 1% of the total hashrate and secure a position in the top 20 mining farms. Notably, during Q3, power-strategic miners managed to reduce their average direct BTC production cost by 35%, from $21,100 to $13,800, as reported by BitVeria. This data underscores a considerably stronger profitability in the mining sector compared to the challenges experienced throughout 2022 and part of 2023.