Daily Bitcoin On-Chain Snap #4

Cumulative Exchange Balance shows 50% increase in Tether Balances since May sell-off

Buying power, as measured by the capacity of stablecoin supply to purchase bitcoin, has been steadily rising in Q3. This growth bodes favorably for upward momentum, given the repeated FUD coming out of China and regulators alike. To note, the previous all-time high of stablecoin balances on exchanges was $10bn in May. This figure is closer to ~20bn today, across all stablecoins, indicating plenty of dry powder to combat near-term downside volatility.

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Net Unrealised Profit/Loss signals belief, similar to September 2020’s Bull Run

Net Unrealized Profit/Loss looks at the difference between Unrealized Profit and Unrealized Loss to determine whether the network, as a whole, is currently in a state of profit or loss. Any value above zero indicates that the network is in a state of net profit, while values below zero indicate a state of net loss. In general, the further NUPL deviates from zero, the closer the market trends towards tops and bottoms. As such, NUPL can help investors identify when to take profit (blue) and when to re-enter (red). Currently, the indicator is reading ‘Belief’ with a NUPL of ~.51. For comparison, the lowest reading for the year was in mid-July around .35-.40, and the highest was mid-February around .75. The same setup appeared during the brief pause in the bull-run in September 2020.

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