Waiting for a bump in Bitcoin's on-chain activity

Bitcoin on-chain report, July 2024

History is telling us that it is worth paying attention to the level of on-chain activity for Bitcoin.

Uptrends in Bitcoin's price that are not supported by an increase is the on-chain activity typically don't have any lasting power.

And when the on-chain activity plummets, you know that the demand for real Bitcoins is gone.

In which situation are we right now and what does that tell us for Bitcoin’s growth potential in the short term?

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Waiting for a bump in Bitcoin's on-chain activity

The takeaway

Bitcoin ETFs are accumulating coins again, but at a slower pace compared to their initial launch period.

This slower accumulation is not creating a significant bump in on-chain activity, which historically has been associated with stronger price momentum.

On-chain activity serves as a market regime indicator:

• Large rises in activity correlate with higher volatility and significantly higher average returns.

• Business-as-usual activity (small rises or falls) shows typical return distributions.

• Large falls in activity correspond to lower volatility and average returns around zero.

The current lack of a significant rise in on-chain activity suggests we may not be on the path to another parabolic move for Bitcoin in the short term.