Bitcoin Is Down 5% Today, but Blockchain Data are Bullish

Analysts and on-chain data firm Glassnode find positive Bitcoin indicators despite today's modest price pullback.

According to CoinMarketCap, at the time of writing, the price of Bitcoin (BTC) is down 5.5% this morning. Today's strong jobs report could be stoking concerns that the Federal Reserve will be more likely to increase interest rates to slow inflation when it meets in mid-March.

Despite this modest pullback, other data suggest positive upside trends for Bitcoin.

High transfer volume between Bitcoin wallets

Some analysts believe that Bitcoin continues to prove itself as a strong store of value versus other assets. A few days ago, the cryptocurrency traded at a 40% premium in Russia as citizens looked for a way to preserve the value of their funds as the Russian ruble dropped more than 30%.

In its daily note to email subscribers, crypto research firm Delphi Digital stated that the supply of Bitcoin moving between digital wallet addresses in a 24-hour period soared to around 565,000 Bitcoin. "This is the highest level seen in over a year. In fact, only two events have seen higher activity: Black Thursday in March 2020 and in May 2020. The supply of Bitcoin held by smaller addresses (0.001 – 10 BTC) saw a steep uptick, which could be a result of capital flight from the Ruble to Bitcoin," the Delphi note stated.

This high transfer volume suggests that more users see Bitcoin as an attractive alternative to leaving funds in a traditional bank or fiat currency. These factors could be contributing to a price prediction of $50,000 per Bitcoin by the end of March, according to Nigel Green, CEO of financial services firm deVere Group.

Record number of Bitcoin wallets with balances

Another interesting data point comes from on-chain analytics website Glassnode, which reported this week that the number of digital wallets holding some amount of Bitcoin reached an all-time high of 40,276,163. Furthermore, those wallets carrying a Bitcoin balance are increasingly holding their coins. The amount of BTC circulating supply last moved between three and five years ago reached a four-year high of just over 2.8 million BTC, according to Glassnode. Both of these measures suggest that more people are holding Bitcoin than ever before and they're holding it longer once they acquire it.

This discussion is not financial advice, and every investor should do their own research and be sure to only invest what they can afford to lose. However, because Bitcoin has a capped supply of 21 million coins, the data noted here seems to point to long-term price uptrends for this asset.