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Bitcoin (BTC) On-chain Analysis #1: Is this the bottom?

BTC is going sideways at the price range of $21,000, let's see what the on-chain indicators of BTC are showing!
Published Jul 07 2022
Updated Nov 27 2023
11 min read

This past week, BTC still went sideways in the range of $19,000 - ​​$21,000. This is a particularly sensitive pricing zone, and any BTC's price movements in this range can have a significant impact on investors’ sentiment. Many people have questioned whether or not this is the bottom price of BTC. Let's check out what the BTC on-chain indicators are displaying!

Key insights:

  • The macroeconomic environment as a whole is negative and could be stagnated in the next 1-2 years.
  • On-chain indicators show that the market is in a depressed state, with selling signals from long-term holders and also miners.
  • Most investors in the market are suffering losses, the NUPL index is at a record low that is comparable to the bottoms of 2018 and 2020.
  • Losses from BTC wallets are also at an all-time high. However, there have been more signs of accumulation from whales.
  • Institutional investors demonstrated their bearish view of the crypto market as they stopped pouring money into the crypto investments and exposure to short-BTC ETF instead.

General macroeconomics situation

First of all, the Russian-Ukrainian conflict affects the oil supply, driving up commodity prices while the economy stagnates. High inflation forced the FED to repeatedly hike interest rates, and the Japanese yen fell to its lowest point in 20 years.

Under this situation, most asset classes and financial markets are negatively affected. Not only BTC, but also other asset classes like stocks, bonds, gold, and silver have declined since March 2022.

The U.S stock market, which is one of the markets that is supposed to have a relation with the cryptocurrency market, saw a major decline in the stock index group, with the S&P 500 falling more than 20% since March 2022.

These circumstances have led many experts to forecast that the global economy will go sideways during the next two years. The price of Bitcoin may have some pump, but it's possible that we'll have to wait years for the next bull season. Let's dive into on-chain metrics analysis next to find out what those metrics are showing.

BTC data from exchanges

Long-term data shows that the number of BTC on exchanges has only been in a downtrend since December 2021. Unlike the sharp drop in September 2020, the price of BTC has not increased during this period.

However, this is still a somewhat positive sign that a large amount of BTC (~300,000 BTC) has been withdrawn to hot wallets. It is also worth noting that this has been the lowest BTC reserve on exchanges in the past 4 years.

The amount of BTC available on exchanges has recently begun to correct by a large margin. In the last mid-June dump, the number of BTC put on exchanges spiked by 2.5%, causing the BTC price to correct to 18,800. It soon recovered to its previous level, raising the possibility that this was a result of whale accumulating.

The level of BTC on floors dropping to the bottom is also a positive signal, but this means that the liquidity on exchanges will decrease, leading to a large volatility.

Regarding the precise numbers of exchanges, there is a clear distinction between Coinbase and Binance, the two biggest exchanges currently. While Coinbase has a strong downward trend from the beginning of 2022, the amount of BTC kept on Binance tends to grow rapidly from the beginning of 2021 and continues to increase dramatically from May 2022.

From the information above, a few things can be inferred, however, there are also many different possibilities and perspectives:

  • Coinbase is a top-tier exchange that only offers trading of BTC Spot, also known as an exchange commonly used by institutions or whales. Binance with more programs is often preferred by individual investors.
  • If these assumptions are true, it is clear that whales are accumulating BTC and sending them to non-custodial wallets, which led to the fall of BTC balance on Coinbase.The amount of BTC on Coinbase drops at regular intervals with large volume is a proof showing whales appear to be accumulating their bags. In contrast, retail investors tend to send BTC to the Binance exchange to buy and sell, and use Binance’s other products…
  • Binance US recently launched a BTC trading program with 0% fees. The program started on June 22, with the main purpose of attracting new users from competitors. Binance does not involve themselves in users' transactions, so this is different from Robinhood and it’s designed to draw new users to put BTC on Binance and use other products of this exchange such as staking service, leverage trading
  • Additionally, this story is also impacted by legal considerations. Recently, Coinbase requested users in the Netherlands to complete KYC (Know your Customer) processes before transferring funds from Coinbase to non-custodial wallets. Even though it's only because Coinbase complies with local regulations, some users find it disturbing.

On June 17, the amount of BTC withdrawn from Coinbase reached a record high. Over 53,000 (out of a total of 66,000 BTC withdrawn from exchanges) were withdrawn from Coinbase at around $20,411. This can also be a sign of withdrawing BTC to wallets from institutional investors after purchasing BTC at the desired price.

Exchange Whale Ratio increased sharply to 75%, meaning that the 10 largest transactions of whales accounted for 75% of the total volume of BTC deposited on the exchange. Following that, BTC fell to $ 19,000 in just 3 days.

Additionally, this indicator has increased from 40% to 58% during the second half of June and is likely to rise even further in the near future. In conclusion, it is advisable to closely observe this indicator and gather data on the exchange's deposits and withdrawals.

If the indicator continues its upward momentum and the volume of BTC deposited on exchanges remains low, it is possible that we will have to witness another flash dump in the near future.

BTC data from derivatives markets

Open Interest volume has plummeted, currently at the lowest level since September 2021, the total volume of BTC futures contracts open is about 7.49 billion USD, which is 4.41 billion USD decrease compared to the beginning of June.

The current state of Open Interest volume also confirms the significant cooling of the market, when traders tend to leave the market. This will also reduce the risk of volatility due to the derivatives market in the short term.

The Funding Rates indicator, which was primarily negative in June and indicates that investors are aggressively shorting BTC, also demonstrates the market's overall bearish sentiment. But since the Open Interest has recently decreased precipitously and is now at a very low level, it is challenging for short BTC traders to put a significant pressure on the BTC price.

Actions from BTC holders

Coin Days Destroyed

Also on June 17, the CDD index showed that a lot of investors lost their patience and sold off BTC at $20,400 leading to panic selling and a bottom price recorded at $18,945.

Combined with the above factors, it is highly likely that the recent drop on June 17 was the time when many long-term holders gave up and sold a certain amount of BTC to whales.


The LTH SOPR (Long-term Holders Spent Output Profit Ratio) index further confirms the above hypothesis. This index hit a relatively low level of 0.79 on June 17; as a result, long-term holders were forced to sell a lot of Bitcoin in order to stop loss.

Not only long-term investors, but also short-term investors have the same story. During the past 2 months, the short-term holders SOPR has been below 1, recording a lot of short-term advisors selling BTC at a loss.


NUPL (Net Unrealized Profit/Loss) determines the total gain or loss from the movement of a coin. To do this, each coin in circulation is balanced by the difference between the current price and the price when it was last transferred.

The NUPL index is also at a record low, at the same level as the bottom of 2018 and 2020 (when Covid first appeared), at -0.1 specifically. This indicator shows that more investors suffer losses than gains. If it reaches -0.25, this is a sign that most investors start to surrender and that price level can be considered an opportunity to accumulate BTC.

Furthermore, according to data from Glassnode, the number of wallet addresses holding BTC that are suffering losses has reached 18,809,386 - the highest in history, which is quite reasonable considering the data above has shown us long-term holders have also lost patience.

Bitcoin wallets

Since Feb 2022, the number of wallets holding one Bitcoin has increased. Wallets having a total balance of more than 1 BTC grew from 847,000 to 878,000 just in June. This shows that retails are taking advantage of the downtrend market to buy BTC. The number of wallets holding more than 100 or 1000 BTC has not changed significantly over time, nevertheless.

Actions from BTC miners

Puell Multiple

The Puell Multiple compares the price of a newly mined Bitcoin with the average market value of all bitcoins mined over a specified period (usually 365 days).

Recently, this index has continuously dropped below 0.5, signaling that the revenue of BTC miners has been significantly lower than the costs they have to spend. This is also an indicator that BTC price is undervalued, and miners have more incentive to hold BTC.

Hash Ribbon

Hash Ribbon is an indicator that identifies periods where Bitcoin miners are struggling and may be giving up.  

The 60 DMA hash rate has surpassed the 30 DMA index starting in mid-June 2022, indicating that Bitcoin mining machines are being shut down because of challenging market conditions, which causes the hash rate to fall. The orange columns indicate when miners are struggling and are forced to shut down their equipment.

According to this indicator, when the 30 DMA crosses the 60 DMA and the BTC price starts to recover, it is a sign of a bottom.

Miner Reserve

The Puell Multiple indicator reveals that the current mining profit is not so lucrative. Other indicators, however, suggest that miners prefer to sell more than hold BTC.

When the market dumped in late June, the quantity of Bitcoins held in miners' wallets rose significantly.  Shortly after this, the Bitcoin balance began to fall dramatically. One of the reasons is that miners do not desire to sell bitcoin at the current low price and instead use it as collateral to borrow money to cover operating expenses.

B. Riley Financial data reveals that BTC miners are borrowing at least $2 billion. Although the precise liquidation price is unknown, these loans are at risk of margin calls given the state of the market at the moment.

In recent days, there has also been an increase in selling pressure from miners. This demonstrates a bearish state of the market, miners suffer a loss due to lower revenue but still decide to sell BTC to cover the loss.

Changes in the balance of top BTC holders

BTC Whale

Top Bitcoin holders can be tracked here. In this section, we will continue to track the whale wallet 1P5ZEDWTKTFGxQjZphgWPQUpe554WKDfHQ.

The whale is demonstrating an active accumulation of BTC in the lower price zones after taking profit of 500 BTC at $30,125 and buying constantly during the previous month. This whale has recently bought about 5000 BTC, especially, this whale bought the dip at the current lowest price of $18,833.

Additionally, a brand-new whale entered the top 20 in June. The 1HiCfvt2NMyoTdUtjBApabZFCd5myJWJzG wallet has recently purchased a sizable amount of BTC.


MicroStrategy just disclosed that between May 3, 2022 and June 28, 2022, they acquired an additional 480 BTC at an average cost of $20,817. With a total initial investment of $3.8 billion, MicroStrategy and its subsidiaries have held 129,699 BTC at an average price of $30,664 to date. MicroStrategy "buys the dip" only occasionally; in the past, they typically bought BTC at a rather high price.

El Salvador

Right after MicroStrategy’s announcement, El Salvador’s president revealed that they also bought 80 BTC (about $1.52 million).

El Salvador purchased 500 Bitcoins for a cost of $30,744 in May, which was their final Bitcoin transaction.

According to the president of El Salvador, they purchased 2,301 bitcoins for a total of $103.9 million, but they are currently losing roughly 55% because their bitcoin is now only worth $46.6 million.

Cypherpunk Holdings

Cypherpunk Holdings is an investment firm based in Canada. At the end of 2020, Cypherpunk Holdings was one of the top 10 public companies holding the most BTC in the world.

However, this company has just declared that they have sold off all BTC and ETH. In particular, 205,8209 ETH and 214,7203 BTC with a total value of nearly $5 million were sold. This can be seen as an effort by Cypherpunk to save funds, since the company's CIO explains that he is concerned that the crypto market has entered the winter and may continue to decrease in the near future.


After cutting off ¼ of their employees, Celsius has fully repaid MakerDAO's DAI loan. In only several days. They continuously repaid loans with a total of 250M DAI and took back 21,962.63 WBTC ($444,838,378).

Although the source of this loan payment is unclear, it most likely came from acquisition deals from FTX, Nexo or Goldman Sachs.

Actions from investors in the traditional financial market

In the past 2 weeks, institutional investors have withdrawn a lot of money from the crypto market. Specifically, in W26, $423 million was withdrawn from the market by investors. In W27, this number is more positive when reaching $64 million+.

However, short BTC funds made up 80% of the $64M number. Up to $51.4 million in purchases made by institutional investors for short BTC ETF products. On June 22, ProShares launched the first US Short BTC exchange-traded fund (ETF) that allows users to trade on the New York Stock Exchange (NYSE) with the ticker BITI.

Immediately after its launch, this ETF was well received by institutional investors showing a bearish view on the current crypto market.

Investors from the traditional market have stopped pouring money into the crypto market recently, but instead are exposed to the first US short Bitcoin ETF. In just 4 days, BITI has increased by more than 300% and became the second-largest BTC ETF on the US stock market.

Closing thoughts

The recent on-chain metrics have shown many key points:

  • Many investors, notably long-term holders and miners, are beginning to surrender to the challenging market condition.
  • A few on-chain indicators are starting to hit the bottom, but more observations are needed to determine the real bottom.
  • It possibly takes years for the next bull market to happen, there also may be another flash dump due to the bearish factor covering the whole market, the positive signal is that the whales still have signs of accumulation.

On-chain indicators are tools for analyzing market sentiment and analyzing past data, and should only be considered as a complementary analysis method, not investment advice. Please consider carefully before making your own decisions!

Read more Bitcoin rallied to $24,400, Altcoins rallied 50-100% in a week.