Bitcoin (BTC) is in a “trepid state” when it comes to adoption – but a silver lining is already visible, according to a new study.
In its latest edition of its weekly newsletter, “The Week On-Chain,” crypto analytics firm Glassnode said that Bitcoin is going through a “massive meltdown.”
Bitcoin adoption goes back to March 2020
The current BTC price action is putting pressure on everyone from long-term holders (LTHs) to miners, and relief is hard to come by.
Macro turbulence and resistance at $20,000 is keeping BTC/USD at levels visited once since 2020.
Along with big gains this week, with more than $20,000 worth of buying, warnings remain that more pain will come first for the market before a recovery begins.
For Glassnode, the ongoing low levels are causing a seismic shift in the Bitcoin investor profile, with retail and speculators – called short-term holders (STHs) – now pushed out.
“With network adoption levels declining to levels last seen during the Covid crisis, network activity is at a critical juncture,” he concluded.
“However, one developer observes, banishing retail participants from the network leaves only a segment of HODLers, professional traders, and everyday Bitcoin users. This shows that the user base is at the basic level.
This reset of network diversity can have a positive impact on on-chain adoption.
As Cointelegraph reported this week, LTHs are notoriously stubborn during bear markets and data shows they are in no mood to sell.
“The HODLer segment remains resolute, emphasizing their reluctance to release coins that have both matured coin dollar assets reaching ATHs and many lifetime metrics set to all-time lows,” Glassnode continued, citing its latest data analysis.
“This suggests that much of the current market volatility is associated with the short-term holding segment.”
A “large supply airgap” threatens to return to $12,000
While the spread of LTHs has been increasing according to the majority of investors, STHs are likely to fall below the $17,600 macro low seen in June of this year.
Related: BTC Price Stays Below $19K on Hopes Q4 Will End Bitcoin Bear Market
This, Glassnode explains, is due to the volume gap below that level – meaning any sell-off could easily snowball into the next bidding zone, currently at $12,000.
“A large supply air gap has been seen from the $11-12k range to below $18k,” The Week On-Chain noted elsewhere.
“Lower trading than the current cycle will push a very unusual amount of short-term holding coins into deep uncharted territory, which could exacerbate low volatility and trigger another broad capital event.”
The accompanying chart shows a lack of volume between the two price areas, in stark contrast to the $20,000 area, which is now filled with STH interest.
Meanwhile, macro factors have mainly contributed to other warnings about BTC price stability in recent weeks and months, including forecasts for BTC/USD falling below $10,000.
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