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According to ARK Invest’s latest monthly report, Bitcoin (BTC) continues to exhibit a net positive on-chain health, despite facing some challenges from a price perspective. To maintain its bullish uptrend, the cryptocurrency must keep two crucial support levels intact.
Bitcoin’s Healthy On-Chain Metrics: What Does It Mean?
In its report, ARK Invest suggests that Bitcoin needs to gain some upward momentum to preserve its market structure. The report highlights that in August 2024, BTC’s price dropped by 8.7% to $58,972. Additionally, Bitcoin failed to surpass its 200-day moving average, making the support levels at $52,000 and $46,000 vital for maintaining its bullish trend.
Despite these temporary setbacks, the report emphasizes that Bitcoin’s on-chain health remains positive. Key on-chain metrics, including network security, network usage, and holder behavior, contribute to this positive outlook. For instance, Bitcoin’s long-term holder supply, or BTC held for over 155 days, increased by 3.3% month-over-month (MoM) and showed a slight year-over-year (YoY) decrease of 0.23%. Furthermore, Bitcoin’s locked supply rose by 0.58% MoM and 1.82% YoY.
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Bitcoin’s transaction volume experienced a decline of 24.5% MoM and 2.3% YoY, which is a bearish indicator. Nonetheless, the bullish on-chain metrics outweigh this single bearish indicator, ensuring that Bitcoin’s overall on-chain health remains net positive.
Another key performance indicator that strengthens ARK Invest’s bullish stance on Bitcoin is the short-to-long liquidation dominance. This metric, which measures short-term liquidations relative to long-term liquidations over the past 90 days, is currently at its lowest level since Q2 2023.
Bitcoin ETF Investors Underwater At Large
The report also points out that by the end of August 2024, the estimated cost basis for US spot exchange-traded-fund (ETF) participants was higher than BTC’s price. This suggests that the average ETF investor might be at a loss. The higher estimated cost basis for US spot ETF participants compared to Bitcoin’s price is illustrated in the accompanying chart.
Earlier this year, the US Securities and Exchange Commission (SEC) approved a spot Bitcoin ETF, making it easier for both institutional and retail investors to gain exposure to Bitcoin through a regulated investment product.
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Bitcoin ETFs have seen unprecedented interest from institutional investors. Major Wall Street firms such as Goldman Sachs and Morgan Stanley have invested millions of dollars in Bitcoin ETFs. In contrast, Ethereum ETFs have not attracted comparable levels of institutional interest.
At the time of writing, Bitcoin is trading at $57,836, reflecting a modest 0.2% increase in the past 24 hours. BTC’s total market cap stands at $1.14 trillion.
