Anyone who has been paying attention to Bitcoin in the past will notice a subtle, but important change in its fundamentals. As BTC prices returned to May highs, just before the first capitulation event, there was an upswing in on-chain activity.
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In contrast to the sales period from May to the end of July 2021, Bitcoin transactions increased. This increase shown by Explorer Mempool.space leads to an increase in network fees.
At the time of writing, a high priority Bitcoin transaction must be paid 20 SAT / VB to be included in the blockchain, one of the highest fees in the last month. In contrast, BTC traded at 57 57,632 on the daily chart with a 19.3% profit.
Although the Bitcoin network is still far from the level of activity at its peak, the improvement is significant and could point to a sustainable rally towards the end of 2021.
According to a recent report from Glasnod, improvements in network activity suggest that new demand for bitcoin may hit the market in Q4. The research firm has seen a 19% increase in on-chain individual participants in the last 7-days.
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This metric stands at 291,000 active organizations per day. Glassnode outlined what this might mean for BTC:
This value is equal to the calculation from the end of 2020 at the beginning of the last bull race. More active market participants stage historically associated the bull with a growing interest in resources.
Also, the moderate transaction size increased in September. This metric stands at 1.3 BTC, the research firm claims.
The medium-sized transaction size does not necessarily indicate the continuity of the current assembly, but suggests more companies are coming to the market, Glassnode added:
Generally speaking, there are times near the end of the bear market when smart money starts to accumulate. These times are often characterized by low (but increasing) on-chain activity and increasingly large transaction size.
Will Bitcoin enter the bullish phase?
Additional information provided by Glassnode notices an increase in some important metrics. For example, Bitcoin’s percentage supply of profits reached a 4-month high last week.
The volume of transactions in the BTC Perpetual Futures contract reached a 3-month high of 1 281,278,010 on the crypto exchange BitFinex. This suggests that the derivatives market is also starting to heat up and this could again become a barrier for BTC bulls.
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However, the transfer volume, a metric used to compare on-chain activity with the “stored value” in Bitcoin, as a percentage of realized caps, has recently risen above 3%. As Glassnode indicated, it could enter the BTC a bullish market stage.
The transfer volume again broke above the 3% threshold which indicates the growing demand for value-based chain settlement. This is a development worth seeing next week based on its historical clues.