Chain Gang 7/23

Adam Gotelli
4 min readJul 24, 2021


After weeks of ranging, Bitcoin finally broke free. Two months of BTC trading between roughly 30k-40k resulted in the asset dropping below support, to around 29.5k. This may not seem like a huge deal to the average retail trader, but that slight movement down may be a precursor for new higher-lows. This means that it may result in a price movement upwards that creates a resistance significantly greater than 30k. After touching weekly lows, price shot back up to over 33.5k. Price has remained there since. This was a sign of strength for the asset, as skeptics were calling for a further drop below 28k. BTC will have to create new levels of support in the near future in order to confirm bullish sentiment. With all of the variables in play, on-chain metric patterns have remained consistent. This week is just another reminder of why on-chain metrics are so special. It is difficult to get real-time information on any sort of trading behavior for so many other assets. Bitcoin’s open-source blockchain allows anyone the ability to analyze the markets in full detail. This goes far beyond any technical analysis.

Accumulation, accumulation, accumulation remains the theme as long-term holders and BTC whales have continued to add to their supply during this discount period. When looking at the liquid supply ratio, we see long-term holders gaining momentum while accumulating. As seen in the chart, HODLers slowed down their accumulation pace after all-time highs. The ratio is now approaching similar levels seen right before previous all-time highs.

When observing the liquid supply ratio over the past several years, we see what happened following the 2017 bull market. Rather than dwelling on the recent corrections in price, we may have just experienced a healthy correction amidst a bull market. Such a slow and steady recovery seen in this ratio will create stronger support levels if we truly are still in a bull cycle. This was something that was never seen during the 2017 bull market, which may have contributed to the rapid crash in price.

To no surprise, selling continues to come from those who have not held Bitcoin for a long period of time. This can be seen in the entity-adjusted ASOL (average spent output lifespan). It observes the average age of the coins being sold (in days) in relation to the price.

This next metric lets us take a clear look at the selling behavior of miners. It is important to remember that miners are generally the most bullish in the space. If they choose not to sell their coins, this is additional bullish behavior from an already bullish group of people. This has been the case since February, as there was a slight rise in selling during the China mining ban announcement.

Now we’ll take a look at miner net position change. This metric reaffirms what was mentioned above, and continues the trend that we have been monitoring over the past few weeks. It will be interesting to see if miner accumulation can surpass the recent highs that were seen in May.

As always, we have to keep an eye on the Stock to Flow Ratio (S2F). The creator of the model has stated that he believes the recent price dip is just another bounce in the overall upward trend of the model. With bullish institutional and mainstream adoption flooding the space daily, S2F will have to rely heavily on that news not yet being “priced in” to the value of BTC. This means that there would be a hopeful delay in buying that is taking place after the bullish news is released. The model price is approaching 90k, while the actual price is around 33k-34k.

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