Bitcoin (BTC) woes is likely to continue. On-chain metric depicts room for further losses.
Leading on-chain data provider, Glassnode’s ASOL (Average Spent Output Lifespan) metric depicted high values. This indicated that traders are spending coins as Bitcoin hovers near $42,000. The ASOL metric typically shows that high values are an indicator of old coins being spent, and often means long term holders taking advantage of high market volatility. This is what Glassnode had to say,
“Bitcoin BTC Number of Spent Outputs with Lifespan 3m-6m (7d MA) just reached a 3-month high of 1,220.780. A previous 3-month high of 1,217.994 was observed on 04 February 2022.”
BTC Shoots Up
In a recent price surge, traders have moved a total of $800 million worth of BTC from cryptocurrency exchanges. The sudden shoot in price came as a surprise in a market saturated with on-chain and fundamental data indicating the continued demise of digital gold, which has failed to rebound several times. But while the majority bet on the end of the bull market and a further drop below $30,000, centralized exchanges were constantly facing losses of their reserves, which indicated that traders are not actively selling as the majority thought.
The price of the most popular cryptocurrency stood at $42,714 up by 3.36 percent over the past 24 hours. As per CoinGecko data, Bitcoin’s value has surged close to 13 percent over the past week, after a dismal showing through January.
The first positive sign for the industry was the “decoupling” of the majority of cryptocurrencies on exchanges and the stock market that plunged while Bitcoin and other digital assets were either trading in the neutral or positive zone.
Usually, negative exchange flow is considered a good sign for the market as selling pressure during periods of large outflows is considerably smaller compared to periods when traders and investors are actively moving their funds to centralized or decentralized exchanges. Since current exchange flows in BTC remain negative, it can be concluded that the majority of the market is not looking forward to selling its holdings despite the negative performance of Bitcoin in the last few months.
What Is ASOL?
For the uninitiated, ASOL measures the average lifespan of coins in number of days of all spent transaction outputs. It highlights on a macro level the lifespan of coins on a per transaction output basis that were spent that day. This provides insight into the balance between short-term (young coins) and long-term (old coins) spending behavior over a period of time.
