Bitcoin's Short Term Gains: Be Suspicious of Them

Bitcoin On-Chain Activity Report, August 2024

Bitcoin moves that are not supported by strong fundamentals usually don't last very long.

It is possible to significantly influence the market in a brief period through leveraged paper positions, these fluctuations may not be sustainable. For long term investors, chasing such volatile moves can be risky.

I’d rather focus on the underlying fundamentals that drive Bitcoin's value. By looking at on-chain metrics and broader market dynamics, we can gain a clearer picture of Bitcoin's health and potential trajectory.

So let’s see how those fundamentals are doing.

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Bitcoin's Short Term Gains: Be Suspicious of Them

The takeaway

Bitcoin's recent price movements lack strong on-chain support. That’s a call for caution. 

Declining on-chain activity and stagnant ETF demand suggest current trends are driven more by paper markets than fundamental buying pressure.

A sustainable bullish trend may only emerge when ETF accumulation reignites, driving significant on-chain movement. Until then I’ll be skeptic towards price action that’s not supported by fundamental trends.

On-Chain Activity on the Decline