Current Cryptocurrency Market Conditions from On-Chain Data

Comparing to the traditional financial markets, the

cryptocurrency

market offers more diverse analytical approaches, one of which is analyzing on-chain data to assess the distribution of tokens. In economics, the price is determined by the supply and demand relationship, and various factors can influence this relationship, which is directly reflected in on-chain token distribution.

Analyzing token distribution involves assessing the cost and quantity held by holders to describe the collective behavior of holders within specific price ranges. By categorizing and defining on-chain data, we can observe how the movement of tokens impacts prices, thus gaining insights into investors' sentiments and market mood.

So, what does the current token distribution indicate about the market phase？

Let's examine this through the analysis of BTC tokens. Several reasons support choosing BTC for token distribution analysis: Firstly, BTC ranks first among cryptocurrencies with high market dominance. Secondly, BTC is the first and most widely recognized cryptocurrency by the public, making it a reflection of the overall market sentiment.

By closely examining BTC token distribution, we can gain valuable insights into the current market conditions and better understand the dynamics and sentiments of investors in the cryptocurrency market.

Based on the holding duration, addresses holding tokens for less than 3 months can be defined as new market entrants or recent users：

It can be observed that every time the BTC price reaches its peak, the proportion of new users significantly increases. During this process, the rate of new user additions accelerates, and each peak is gradually declining

Glassnode defines long-term holders (LTH) as those whose BTC holding period is greater than 155 days and short-term holders (STH) as those whose holding period is less than 155 days. They model a critical threshold based on historical data to calculate the point after which BTC stored in wallets becomes less likely to be spent：

Based on the analysis of holding periods, under extreme conditions where chip movements are completely unchanged, short-term holders will gradually become long-term holders over time. Long-term holders will only increase due to the conversion of short-term holders as their holding periods increase. Therefore, the daily increase in long-term holders can be calculated as: Long-term holders increase = Short-term holders conversion - Original long-term holders selling.

During most of the time, the holding amount of long-term holders continues to increase. However, when BTC prices start to surge, there will be a turning point for long-term holders' holding amount, transitioning from an increase to a gradual decrease. Once the price reaches its peak, the holding amount of long-term holders starts to increase again.

During this process, it can be observed that the turning point when the holding amount of long-term holders begins to decrease often occurs after BTC prices break through the previous high. The holding amount of long-term holders decreases at an accelerated pace, and BTC prices rise rapidly, which is typically the final surge in a bull market. Until the market collapses, short-term holders gradually convert to long-term holders.

Based on the above analysis, the proportion of new users entering the BTC market is currently low, and the holding amount of long-term holders is in an accumulation state, with no turning point observed.

Long-Term Holder Net Unrealized Profit/Loss (LTH-NUPL) refers to the unrealized profit/loss net amount of UTXOs (Unspent Transaction Outputs) held for at least 155 days. It serves as an indicator for evaluating the behavior of long-term investors. According to the LTH-NUPL data：

As observed, when the LTH-NUPL index drops below 0, indicating a surrender of long-term holders, the BTC price often reaches its lowest point in that phase.

Based on the classification and labeling of on-chain data, one can observe the impact of various groups' chip changes on the

coin price

and establish data models using fundamental data. From the analysis above, it appears that the market is in a state of uncertainty, as neither top indicators nor bottom indicators have emerged.

Assessing the market from a chip perspective provides users with more data for analysis on various platforms. Users can conduct analysis and make judgments on the phase market according to their own needs, combining multiple perspectives.