This is the weirdest bear market to date. It seems like most people were prepared for it, even though the death spirals and Chapter 11 bankruptcies that started it came out of nowhere. In any case, every coin is in the red. The market should be in a state of fear, uncertainty, and doubt. That is certainly not the case for the two leading cryptocurrencies. The circumstances might be different for each one, but both markets show signs of unwavering conviction.ย
Long-time holders of bitcoin and ethereum seem to be laughing in the bear market โs face. In the latest edition of The Wolf Den, the author uses Glassnode and Intotheblockโs data to show us how this is true.ย
The Bear Market Vs. Bitcoin
โOn-chain evidence from Glassnode suggests that there has been no meaningful reduction in the conviction of long term believers,โ the newsletter states. To prove this, The Wolf Den looks at the โDormancy Metric.โ The number that โtracks the average age of every Bitcoin that moves, determined by when it was mined. One of the ways to gauge the sentiment of long-term holders is to asses the average age of coins moving around the market.โ
As attentive readers might suspect, the coins that are โmoving around the marketโ are extremely young. In fact, their age โis at multi-year lows. The dormancy value is very low.โ This is consistent with previous bear markets, in which dormancy values tend to be low. The newsletter quotes analysis from Glassnode:
โThe decline in lifespan metrics actually bodes well for the longer-term, as it indicates old coins are stationary, and declining prices have little psychological impact on this cohortโs conviction.โ
So, if we focus on the big picture, everything looks like itโs supposed to. A healthy habit during bear markets.
BTC price chart for 09/02/2022 on Cexio | Source: BTC/USD on TradingView.com
The Ethereum Merge Is Upon Us
For this section, The Wolf Den used data from IntoTheBlock. Before getting into it, the author clarified the sequence of events that compose the mythical โmergeโ. First of all, on September 6th, โthe Bellatrix upgrade happens on the Beacon chainโ. Then, between September 10th and 20th, โthe official transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) will occurโ. The Ethereum Foundation estimates that the merge will happen on September 15th.ย
To evaluate the Ethereum networkโs state during this bear market, The Wolf Den looked into โnetflows onto centralized exchangesโ. Overall, more ETH is leaving the exchanges than entering, which is bullish. It tends to mean people are not looking to sell their assets. However, with the merge looming and the bear market among us, it could have other meanings.ย
On the one hand, people might be โbullish on the merge as users believe that the merge will happen successfully and are loading up on ETH for potential price action.โ On the other, they might be anticipating the possible ETH Proof-Of-Work hard fork. If that happens, โall ETH being held in wallets can claim ETHW at a 1:1 ratio, traders might be preparing themselves to claim the most ETHW possible.โ
Another curiosity about the bear marketโs current state is this. Lately โthe average inflow transaction size is generally larger than its outflow counterpartโ. According to The Wolf Den, thatโs not a problem because โnetflows onto centralized exchangesโ are low. And thatโs a stronger indicator. However, those large inflow transactions might suggest something that makes sense. โLarger traders and institutional investors are more skeptical about the success of the mergeโ.
In any case, long-time bitcoin and ethereum holders show unwavering conviction despite the bear marketโs conditions. For different reasons altogether.
Featured Image by congerdesign from Pixabay | Charts by TradingView
