The FTX crash may have destroyed the industry and wiped billions of dollars from the market, but it doesn’t seem to have shaken people’s faith in Bitcoin. The fact that BTC is struggling to break above $16,000 over the weekend has turned out to be a great buying opportunity for much of the market.
This positive sentiment is no anecdote — on-chain data shows clear signs of increased adoption bucking the bear market.
Dealing with holding BTC at all-time highs
CryptoSlate’s analysis showed healthy network adoption. Increased adoption of the network, characterized by increasing daily active users, higher transaction throughput, and increased demand for block space, has been a bullish sign.
One of the best measures of network adoption is the number of non-zero balance addresses. The increasing number of addresses holding BTC indicates a high degree of on-chain activity taking place on the network. A decrease in the number of non-zero balance addresses usually indicates consolidation as the wallet begins purging assets.
data from glass node It shows a significant increase in the number of non-zero balance addresses on the Bitcoin network. The increase in net addresses he started in mid-October and spiked into November. This increase was followed by a similarly sharp increase in the number of non-zero balance addresses, as shown in the graph below.
Further digging into the on-chain data reveals that the majority of non-zero addresses were created in the last month. His 30-day Simple Moving Average (SMA) for new addresses has outperformed his 365-day SMA, which has been flat for much of 2022.
An increase in the number of new addresses leads to an increase in the number of transactions. All new non-zero balance addresses had to retrieve their balances in the past month, significantly increasing the number of transactions recorded on the network.
Bitcoin on exchanges reaches promising low
Foreign exchange data also show a tendency to accumulate.
The FTX collapse briefly ignited Bitcoin spot volume across exchanges. However, bitcoin balances on exchanges began to decline as trading volumes increased, indicating that users are buying coins in bulk and moving them from centralized exchanges to cold wallets.
Around 2.3 million BTC are currently held on centralized exchanges, similar to levels recorded in mid-2018. This is a steep drop from the all-time high of 3.1 million BTC set in 2020.
Gemini saw the most aggressive Bitcoin outflow, losing around 47,000 BTC in a week. Bitcoin balances held on exchanges have dropped from his 210,000 BTC last week to around 163,000 BTC.
According to data, only about 12% of Bitcoin’s circulating supply is currently held on exchanges. This percentage further confirms the accumulation trend suggested by other on-chain data. It may be a while before we see any bullish momentum, but the continued accumulation shows that confidence in Bitcoin is still high.