‘HODLer Capitulation’ Is Near—Crypto Is Poised for Major Turning Points Like the Price of Bitcoin, Ethereum, BNB, XRP, Solana, Cardano, Luna, Shiba Inu, and Dogecoin Recover

The crypto rebound is alive and kicking.

Over the past few weeks, the price of bitcoin has risen 10.2%, currently trading at $23,076, and the price of ethereum rose 23% to just under $1,700. Most altcoins follow the major’s color. XRP
XRP is up 15.2%, cardano 11.1%, BNB
BNB 30.7%, solana 14.2%, Terras “luna 2.0” 27%, shiba inu 14.7% and dogecoin 15.1%

Crypto saw the biggest gains in the wake of the Fed’s 75 basis point hike, which was jokingly dubbed “a bullish rate hike.” However, the counterintuitive crypto response has a fairly simple explanation.

Fed Chair Powell did a good job of scaring investors and the market simply priced in a bigger hike. So 75 basis points was more of a relief, boosting all risk assets including crypto.

Now the bigger question: is this rally the beginning of a bull market or a “dead cat bounce”?

Zoom out

In the latest report, Glassnode highlighted three statistics on the chain, which point to declining blockchain activity:

• The number of active bitcoin addresses continues to decline from the peak it reached last October. “With the exception of a few peaks of activity higher during major capitulation events, the current network activity suggests that there is still little influx of new demand.”
• BitcoinsBTC
  transaction volume and total fees are still in bear market territory. For reference, transactions are down ~40% from the peak on January 21st, and fees barely reach 14 bitcoins per day, while last year they were from 50 to 200+ bitcoins per day. “While we haven’t seen a significant increase in fees yet, keeping an eye on this metric is likely to be a signal of improvement,” Glassnode wrote.
• EtherETH
  eum shows similar symptoms. Although the price has risen over 50% over the past month, activity on the chain remains quite weak. Ether’s transaction volume has been in decline since last May, and fees (aka gas prices) are at “multi-year lows.”

Looking forward

What could launch crypto into another structural bull market?

Glassnode’s on-chain analysts suggest that a tipping point could be the capitulation of long-term crypto holders (aka HODLers), who are more sensitive to crypto prices than newcomers.

As Glassnode wrote: “Bottom formation is often accompanied by [long-term holders] bears an increasingly large share of the unrealized loss,” the report said. “In other words, for a bear market to reach a final floor, the proportion of coins held at a loss should primarily be transferred to those least sensitive to price, and with the highest conviction.”

The much-anticipated crypto redistribution may be near.

Glassnode spotted the first signs of “HODLer capitulation” in June. In a July note, the analysts wrote: “The $20K region has attracted a large cluster of short-term coin volume. This is the result of a significant transfer of ownership from capitulating sellers to new and more optimistic buyers.”

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