Bitcoin Propels High Amid A Resurging Dollar

In spite of the rebounding U.S. dollar, the key crypto asset largely held on to its gains since the bottom set-in late July, which saw the price remain above $51.5k. During the week, prices ranged from $46,465 to $51,851 a new high for the past 9 days.

Despite the U.S. dollar’s strong rebound at the London trading session, investors continued to wait for clarity about when the U.S central bank will begin asset tapering.

On-chain sentiment remains positive overall, suggesting strong gains in September. A multi-year low remains in spot exchange reserves.

A minimal outflow of Bitcoins to crypto exchanges along with falling transaction counts continue to drive accumulation among miners while aging groups of coins that realized profits during similar rallies are now accumulating again.

This group of coins appears to have sold the initial leg down when BTC was falling back in May 2021, when this group of coins is 12 months old to 18 months old.

During the March 13, 2020, global liquidity crisis, a portion of this group of coins fell from $10k to $3.8k as BTC fell from $10k to $3.8k.  Another event in March 2020 could have led to panic selling in this cohort.

The 12-18-month-old coins aged and continued to accumulate as Bitcoin consolidated above $30k to $40k and pushed high to its current price of around $50k after the May 2021 plunge to $30k

Based on Glassnode’s data, bitcoins younger than three months are the ones most likely to be spent during periods of volatility.  Yet, a decline in HODL waves for young coins indicates that the market prefers to hoard rather than to spend. A very strong downtrend is in play as young BTC comprise only 15% of the coin supply.

Demand and supply are seen from the perspective of an investor who does not plan on selling, while an investor who is willing to sell is on the supply side.

In a few short months, these young coins will transform into middle-aged coins (ages 3 months to a year) and old coins (ages 1 year and older). An increasing proportion of these mature coins suggests increasing illiquid supply because they are statistically less likely to be spent.

The crypto market is experiencing a powerful maturation trend with almost half of the coins in circulation aged between three months and three years.

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