Bear Market Who? Data Shows High Conviction In BTC And ETH

This bear market is one of the most bizarre to date. This bear market seems to have been planned for by most, even though it was created out of nothing. Every coin in any event is now in the red. It is normal for the market to be in an environment of uncertainty, fear and doubt. This is not true for the top cryptocurrencies. While the facts might vary for each of them, they both display a strong sense of conviction. 

Long-time holders of bitcoin and ethereum seem to be laughing in the bear market ’s face. The bear market is a laughing matter. The Wolf Den’s latest issue, the author uses Glassnode and Intotheblock’s data to show us how this is true. 

Bitcoin Vs. The Bear Market

“On-chain evidence from Glassnode suggests that there has been no meaningful reduction in the conviction of long term believers,” the newsletter states. To prove this, The Wolf Den looks at the “Dormancy Metric.” The number that “tracks the average age of every Bitcoin that moves, determined by when it was mined. One of the ways to gauge the sentiment of long-term holders is to asses the average age of coins moving around the market.”

As attentive readers might suspect, the coins that are “moving around the market” are extremely young. In fact, their age “is at multi-year lows. The dormancy value is very low.” This is consistent with previous bear markets, in which dormancy values tend to be low. Glassnode’s newsletter quote analysis

“The decline in lifespan metrics actually bodes well for the longer-term, as it indicates old coins are stationary, and declining prices have little psychological impact on this cohort’s conviction.”

So, if we focus on the big picture, everything looks like it’s supposed to. A healthy habit during bear markets.

BTCUSD price chart for 09/02/2022 - TradingView

BTC Price Chart, 09/02/2022. Source: Cexio. Source: BTC/USD.| Source: BTC/USD on

Ethereum Merge is upon Us

The Wolf Den used data provided by IntoTheBlock for this section. Before getting into it, the author clarified the sequence of events that compose the mythical “merge”. First of all, on September 6th, “the Bellatrix upgrade happens on the Beacon chain”. Then, between September 10th and 20th, “the official transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) will occur”. According to the Ethereum Foundation, the merger will take place on September 15, according to their estimates. 

To evaluate the Ethereum network’s state during this bear market, The Wolf Den looked into “netflows onto centralized exchanges”. It is generally bullish that more ETH is being left the exchanges rather than being entered, and this is overall positive. This tends to indicate that people don’t want to sell assets. With the bear market and merge imminent, however, this could take on other meanings. 

On the one hand, people might be “bullish on the merge as users believe that the merge will happen successfully and are loading up on ETH for potential price action.” On the other, they might be anticipating the possible Hard fork by ETH Proof-Of Work. If that happens, “all ETH being held in wallets can claim ETHW at a 1:1 ratio, traders might be preparing themselves to claim the most ETHW possible.”

Another curiosity about the bear market’s current state is this. Lately “the average inflow transaction size is generally larger than its outflow counterpart”. According to The Wolf Den, that’s not a problem because “netflows onto centralized exchanges” are low. And that’s a stronger indicator. They might also indicate something more. “Larger traders and institutional investors are more skeptical about the success of the merge”.

In any case, long-time bitcoin and ethereum holders show unwavering conviction despite the bear market’s conditions. Different reasons.

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