Tracing Bitcoin’s price decline through crucial metrics

• Derivative and spot trading volume and exchange outflow have declined in the past month.
• Bitcoin long-term holders have, however, continued to increase.

Bitcoin’s [BTC] upward trajectory has hit a roadblock in recent months, dampening its growth and raising concerns. Specific metrics indicated a decline, which could be a significant contributing factor. 

How much are 1,10,100 BTCs worth today?

However, amidst this apparent stagnation, the number of steadfast long-term holders remained remarkably steady, showing resilience.

Bitcoin sees a decline in key metrics

A recent article by CryptoQuant shed light on why Bitcoin’s price growth has been sluggish lately. The decline in two essential BTC metrics and one stablecoin metric significantly affected this slow progress.

The key metrics were BTC trading volume, exchange outflow, and stablecoin inflow.

An analysis of these metrics for July showed that they had experienced a decline. Both BTC spot and derivative trading volumes, according to CryptoQuant, showed no significant daily spikes compared to previous months.

The highest volumes recorded in July were on the 6th and 14th of the month. On 6 July, the spot trading volume reached approximately 114,000, while derivatives surpassed 1.3 million. On 14 July, spot trading was 104,000, and derivatives exceeded 988,000. 

Source: CryptoQuant

However, these highs were lower than those achieved in previous months, indicating a decline in overall trading activity.

Furthermore, the rate of BTC outflow from exchanges declined in July, as depicted by the BTC exchange outflow chart. Although some days showed impressive outflow numbers, the overall trend indicated that more holders were depositing their BTC into exchanges rather than withdrawing them.

Source: CryptoQuant

In addition, the stablecoins exchange inflow metric was analyzed, revealing a noticeable decrease. The chart displayed a sharp drop in stablecoin inflow across exchanges, signaling a decline in buying pressure.

Source: CryptoQuant

These declines in key metrics suggested that the sentiment surrounding Bitcoin was bearish at press time. The implication was that the price of BTC was likely to encounter difficulties in making significant gains.

Bitcoin’s long-term holders rise

Despite Bitcoin’s stagnant growth, the community of long-term holders remained undeterred and continued to expand. A fascinating insight from Glassnode’s supply last active chart revealed an upward trend in the two-year band.

This band represented around 47% of the total supply at the start of the year. However, as of this writing, it has surged to over 56%.

Source: Glassnode

This significant increase in the band indicated that more holders had taken their assets off exchanges. Furthermore, these assets have remained untouched by trading activities for the past two years. Essentially, this suggested a growing number of investors committed to holding onto their Bitcoin for the long term.

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BTC decline continues

The Bitcoin daily timeframe chart showed that its price decline had persisted. As of this writing, the price was trading at a decrease, although it was less than 1%. Specifically, it was trading at around $29,100, which indicated a continuation of the downtrend.

The decline was further confirmed by a drop in the Relative Strength Index (RSI), suggesting strong sell pressure.