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Confusing Bear Market! Data shows interest in Bitcoin & Ethereum

 


This is the strangest bear market yet. It seems most were prepared for the crash. Almost every coin is in the red and the market should be in a state of extreme fear, uncertainty and doubt. However, this is not the case with the two leading cryptocurrencies. Circumstances may be different for both, but both markets are showing signs of unwavering conviction.


Bitcoin and Ethereum long-term investors appear to be welcoming the bear market. In the latest issue of The Wolf Den, the author uses data from Glassnode and Intotheblock to support this statement.


The bear market versus bitcoin

"On-chain evidence from Glassnode suggests there has not been a significant decline in the conviction of long-term believers," the newsletter reads.


To prove this, The Wolf Den looks at the dormancy metric. This is a number that “determines the average age of each bitcoin that moves by the time it was mined.” One of the ways to gauge long-term owner sentiment is by the average age of coins moving in the market.”


The coins that are currently “moving in the market” are extremely young. In fact, age is at a multi-year low. The “resting phase value” is very low”.


This is consistent with previous bear markets where levels have typically been low. The newsletter cites an analysis by Glassnode:


“The decline in lifetime metrics is actually a good sign for the longer-term trajectory as it suggests legacy coins are sitting still and falling prices have little psychological impact on the conviction of this cohort.”


The Ethereum merge is here

For this section, The Wolf Den used data from IntoTheBlock. Before delving into it, the author clarifies the sequence of events that make up the mythical “Merge”. First, on September 6th, “the Bellatrix upgrade will take place in the Beacon chain”. Then, between September 10th and 20th, “the official transition from Proof-of-Work (PoW) to Proof-of-Stake (PoS) will take place”. The Ethereum Foundation estimates that the merge will take place on September 15th.


To assess the health of the Ethereum network during this bear market, The Wolf Den examined “net flows onto centralized exchanges.” Overall, more ETH is exiting crypto exchanges than entering, which is positive. It means people aren't looking to sell their assets in the short term.

Recently, “the average size of inflow transactions is generally larger than that of outflow transactions”. According to The Wolf Den, that's not a problem as "net inflows to centralized exchanges" are small. And that's a stronger indicator. However, these large inflow trades could hint at something bearish: “Bigger traders and institutional investors are more skeptical about the success of the merge”.


In any case, longtime Bitcoin and Ethereum holders remain undeterred despite the bear market conditions. And for very different reasons.

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