Bitcoin On Chain Data: Are We Still At Accumulation Stage?

Is it smart to invest in Bitcoin? Are users still accumulating Bitcoin - or is it time to Realise Profits? In this video we will look at another set of on chain metrics, relating to coin lifespan.

The Bitcoin liveliness chart defines the relationship between coins purchased and coins sold. A down trend indicates that the market sentiment is to accumulate and hodl coins. When trending upwards the market is tending towards profit collection, otherwise known as coin destruction.

In reference to the realised profit chart in my previous video we can see a similar movement in the Liveliness chart. During a bull market, investors tend to realise profits on older, previously dormant coins. Eventually this takes us to a macro top. Conversely in a bear market investors tend to gradually accumulate coins, Thus fewer profits are taken and we reach a market floor.

What we see today is that most coins remain in a downwards trend suggesting that we still have not yet reached the profit taking stage associated with an obvious bull run and that many users are still accumulating coins.

Another key datapoint is the Coin Days Destroyed metric. This reflects the volume of investor hold time that is spent each day. We tend to see sudden upward spikes during volatile events such as the LUNA collapse.

The recent week or two of activity has demonstrated a small increase in Coin Days Destroyed but still not enough when compared with uptrends during periods of continuous profit taking.

A simpler way to look at this comes in the Binary Coin Days Destroyed Chart Here we convert the CDD into 1 if the number of days exceeds the market average, or 0 if it doesn't. Here the periods of heavy profit taking become obvious, shown in pink Overall we still see on chain that there is a continued swing in market sentiment.

But as of now many of the profits are being taken by short term holders And so the on chain data is not, as yet, indicative of a sustained bull run. The coming weeks will tell if history is to repeat itself.