Anyone paying attention to Bitcoin in the past months will notice a subtle, but importance change in its fundamentals. As BTC’s price made its way back to May’s high, just before the first capitulation event, there was an uptick in on-chain activity.
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Unlike the sell-off period that occurred from May to end of July 2021, there was an increase in Bitcoin transactions. This rise led to an increment in network fees, as shown by explorer Mempool.space.
At the time of writing, a high priority Bitcoin transaction needs to pay a 20 sat/vB to be included in the blockchain, one of the highest fees in the past month. Conversely, BTC trades at $57,632 with a 19.3% profit in the daily chart.
BTC on a rally in the daily chart. Source: BTCUSD Tradingview
Although the Bitcoin network is still far from the levels of activity experienced during its price peaked, the uptick is significant and could point towards a sustain rally by end of 2021.
According to a recent report by Glassnode, the boost in network activity suggest fresh demand for Bitcoin could arrive to the market in Q4. The research firm records a 19% grown in individual participants on-chain during the past 7-days.
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This metric stands at 291,000 active entities per day. Glassnode noted the following on what this could mean for BTC:
This value is on par with counts from late 2020 at the beginning of the last bull run. More active market participants has historically correlated with growing interest in the asset during early stage bull markets.
In addition, there has been an increase in the median transaction size during September. This metric stands at over 1.3 BTC, the research firm claimed.
A surge in the median transaction size doesn’t necessarily implies a continuation of the current rally, but suggest more institutions are coming into the market, Glassnode added:
Generally speaking, periods near the end of bear markets are when smart money start to accumulate in size. These periods are often characterised by lower (but rising) on-chain activity and increasingly large transaction sizes.
Bitcoin To Enter Bullish Phase?
Additional data provided by Glassnode notes an increase in some important metrics. For example, the Bitcoin Percent Supply in profit for the past week reached a 4-month high.
The transaction volume in the BTC Perpetual Futures Contract reached a 3-month high of $281,278,010 on crypto exchange Bitfinex. This suggest that the derivatives market is also starting to heat up and could once again become an obstacle for the BTC bulls.
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However, the Transfer Volume as a percentage of the Realized Cap, a metric used to compare on-chain activity with the “value stored” in Bitcoin, recently rose above 3%. As Glassnode indicated, this suggest BTC could be about to enterer a bullish market phase.
Transfer Volume has once again broken above the 3% threshold suggesting growing demand for on-chain settlement of value. This is a bullish a development worth watching in the coming weeks based on its high historical signal.