CryptoQuant CEO: Bitcoin Sees On-Chain Activity Levels Comparable to Mid-2020

Should the current trend mirroring Bitcoin’s on-chain activity in 2020 continue, it could have significant implications for its price trajectory.

In a recent tweet, Ki Young Ju, CEO of CryptoQuant, made a comparison between Bitcoin’s current market trends and those seen in mid-2020. Ju pointed out that the current surge in on-chain activity resembles the period when the cryptocurrency held steady at approximately $10,000 for about six months in 2020.

That significant on-chain activity was later identified as resulting from over-the-counter (OTC) transactions. These transactions involved large volumes of Bitcoin being traded outside of traditional exchanges, typically between institutional investors or high-net-worth individuals, seeking to avoid influencing the market price.

Ju’s tweet highlights that today Bitcoin, despite low price volatility, continues to exhibit high on-chain activity.  Currently, new whale wallets, accounts holding large quantities of Bitcoin, are seeing an influx of approximately $1 billion daily.

This substantial increase in whale wallet activity suggests that large investors are actively accumulating Bitcoin, likely for custody purposes.

Who Is Selling amid High Accumulation?

This observation prompts an important discussion within the crypto community. Despite institutional investors and whales accumulating Bitcoin, and exchange-traded funds (ETFs) buying in, the price does not seem to mirror these considerable inflows.

The answer might lie in the selling pressure from other market participants. If Bitcoin price remains stable despite high demand from large investors, there must be a corresponding supply. This supply could be coming from a variety of sources, including retail investors taking profits, miners selling their rewards, or long-term holders liquidating their positions.

The activity in whale wallets and the accumulation by ETFs may suggest a long-term approach to Bitcoin investment. These large entities might be preparing for future market movements or further regulatory developments that could impact the cryptocurrency landscape. This steady accumulation, coupled with low price volatility, indicates a market in consolidation, where buyers and sellers are finding equilibrium.

What Happens If the Trend Continues?

Should the current trend mirroring Bitcoin’s on-chain activity in 2020 continue, it could have significant implications for its price trajectory. The year 2020 witnessed a notable surge in the value of Bitcoin, kicking off a bull run that extended into 2021, with Bitcoin surpassing its previous all-time high.

Historical data suggests that heightened on-chain activity often precedes significant price rallies. If this pattern continues, it could signal a sustained period of upward movement for Bitcoin prices.

There is already growing anticipation among experts that Bitcoin could surpass its all-time high and potentially cross $100,000 within less than a year.