Research has detailed Bitcoin’s recent record-low volatility and, while traders expect an eventual price breakout, the Oct. 26 BTC price move to $21,000 is not yet being interpreted as confirmation that $20,000 has now become support. 

In a recent “The Week On-chain Newsletter,” Glassnode analysts mapped out a bull case and a bear case for BTC.

According to the report, the bear case includes limited on-chain transaction activity, stagnant non-zero address growth and reduced miner profits presenting a strong Bitcoin sell-off risk, but data also shows that long-term hodlers are more determined than ever to weather the current bear market.

The bull case, on the other hand, entails an increase in whale wallets, outflow from centralized exchanges and hodling by longer-term investors.

Stalled new address growth

On-chain active address growth remains stagnant across the BTC network. A reduction in transactions translates to a decrease in utilization and user growth for the network, factors which could possibly hinder BTC price expansion.

New addresses within the Bitcoin ecosystem that possess a non-zero address have also plateaued, a trend which also occurred in November 2018. Stalled growth in new non-zero addresses back in 2018, was followed by a BTC price dip that did not recover until January 2019, when this metric began to increase.

Related: Public Bitcoin miners hash rate is booming, but is it actually bearish for BTC price?

Miner selling could trigger a new sell-off

In previous years, many BTC miners held onto large quantities of BTC in their reserves. However, since the onset of the bear market, many miners are selling BTC in order to cover their capital costs and operational expenses.

With BTC mining production costs rising amid a backdrop of falling revenues, miners are deleveraging by selling their newly mined BTC. Glassnode warned:

“Deleveraging events of miners may lead to distribution into thin order books, historically light demand, and persistent macroeconomic uncertainty and liquidity constraints.”

As the price of BTC drops and miners’ profitability shrinks, miners may be forced to liquidate more of their reserve Bitcoin holdings.

Whales are accumulating

In spite of the falling BTC prices many BTC whales that hold an excess of 10,000 BTC are possibly increasing their holdings even in bear market conditions. As shown in the chart below, they continue to accumulate BTC after distributing in April and September.

BTC withdrawals from centralized exchange could reduce sell pressure

Funds moved from centralized exchanges weakens immediate selling pressure on the market. Coinbase, one of the highest volume centralized exchanges, is seeing large amounts of BTC withdraws. When comparing the current BTC outflow from Coinbase to the post-March 2020 peak at the exchange, over 48% of the total BTC at the exchange has been transferred out.

Glassnode points out:

“Coinbase has seen a very large-scale net withdrawal of -41.6k BTC this week. […] It is important to note that these outflows are based on our best estimated wallet clusters, and appear to be a combination of coins flowing into both investor wallets, and/or institutional grade custody solutions.”

Hodlers keep hodling

According to the Realized Cap HODL Waves metric, the total USD wealth held in BTC, valued at the time of each coin’s last transaction, is now disproportionately skewed to longer-term holders. The proportion of wealth held in coins that moved in the last three months is now at an all-time low. The reciprocal observation is that wealth held by coins older than three months (increasingly held by hodlers) is now at an all-time-high.

Some Bitcoin analysts believe BTC’s low volatility during this period is “a calm before the storm” and the current macroeconomic and price surge of BTC may show the resolve of hodlers as the winning factor.