Investors Hoard Bitcoin, Betting on Price Surge

The mean on-chain transfer value in Bitcoin has significantly decreased since its 2021 peak, indicating investors' reluctance to sell. Analysts attribute this to anticipation of higher prices, as evidenced by Bitcoin's recent record highs. Despite this, on-chain activity remains low, with transfer volume below $200,000. The influx of spot bitcoin ETFs is seen as a major factor in Bitcoin's rally, but other metrics suggest that investors are holding onto their coins, expecting further price appreciation.

Are Investors Hoarding Bitcoin, Anticipating a Surge?

Data from Glassnode reveals that the dollar value of average on-chain transfers on the Bitcoin blockchain remains significantly below its 2021 peak. This trend suggests that investors are holding onto their BTC in anticipation of higher prices, according to analysts at Blockware Solutions.

Why the Discrepancy?

Despite Bitcoin's recent record-breaking highs above $70,000, the real economic activity on its blockchain is subdued. This divergence is partly attributed to strong holding sentiment in the market, as Blockware Solutions analysts note in their newsletter: "Nobody wants to sell."

What Defines Transfer Volume?

Glassnode defines transfer volume as the U.S. dollar value of all BTC transferred on-chain, excluding unsuccessful transfers. The dollar value of the average transfer volume is currently below $200,000, far below the $1 million and higher levels seen during the 2021 bull market.

The Role of ETFs

The recent rally in Bitcoin has been primarily driven by Wall Street's embrace of Nasdaq-listed spot bitcoin ETFs. This concentration of spot volume in ETFs has contributed to the low on-chain volume.

Investors' Holding Patterns

Other metrics also indicate that investors who weathered the 2022 bear market are holding onto their BTC, expecting a continued price rally. The percentage of bitcoin supply that was last active between three and five years ago continues to rise. Analysts predict a potential rally into six figures in the coming months, with a peak above $150,000.

When Will On-Chain Volume Surge?

Blockware analysts believe that on-chain volume will surge once the price starts to move significantly. Older coins will be transferred to exchanges for sale. Until then, low on-chain volume is a sign of limited supply and anticipation of further price appreciation.

Bitcoin's Current Market Position

At the time of writing, Bitcoin is trading at $67,700, up 5% on a 24-hour basis. The broader market gauge, the CoinDesk 20 Index, is also up 5%.