Market Pullback: On-Chain Perspective
As the summer doldrums continue with BTC stuck in the $30,000 to $40,000 range, on-chain data paints an evolving story following the spring downturn. BTC on exchanges have seen net outflows for the last 19 days, a reversal from inflows in May and recent on-chain data paints a bearish picture with regards to network activity and hash rate. The 7D SMA of unique active addresses continues to trend lower (-12.7% WoW as of June 22, 2021), according to data from Glassnode, touching levels not seen since April 2020. This corresponds with softer interest from retail, as the number of daily new addresses approaches the lows from 2020. Despite this, it is important to keep in mind that the reach of BTC keeps growing, as demonstrated by the growing number of total Bitcoin addresses.
Overall, the market seems to be in wait and see mode, with all eyes on the BTC mining crackdown in China. According to Twitter posts from Kevin Zhang, VP of Business Development at BTC miner Foundry, roughly 70% of China's BTC mining capacity has gone offline already, with 90% expected to be offline by the end of June 2021. Consequently, we believe Bitcoin's price may remain pressured in the short-term until the hash rate rebounds from Chinese miners relocating and coming back online, which would signal much needed stability.