Active Supply of Bitcoin at its Highest Level in the Last 6 Months! Is this a Good Thing?

• Despite the developments related to Bitcoin price movements, spot Bitcoin ETFs, and important crypto cases such as Grayscale, the market has been largely dominated by sideways movement.
• In the period from the past 6 months to 1 year, the amount of active supply has reached the highest level in the past 6 months, based on a 1-day moving average.
• Participants in the CME FedWatch Tool recorded a 98% probability of the Fed not changing the current target interest rate of 525-550 basis points ahead of the Federal Open Market Committee (FOMC) meeting of the US Federal Reserve.

According to Glassnode data, the amount of active supply in the past 6 months to 1 year has reached the highest level in the past 6 months: What does this mean?

An Increase in Bitcoin’s Active Supply Amount is Observed

Despite the influence of Bitcoin price movements, spot Bitcoin ETFs, and developments related to important crypto cases such as Grayscale, the market has been largely dominated by sideways movement. However, on-chain data shows that the current BTC trading model exhibits an inherent strength in terms of trader life cycle.

According to Glassnode data, in the period from the past 6 months to 1 year, the amount of active supply has reached the highest level in the past 6 months based on a 1-day moving average. Interestingly, the increase in the active supply for Bitcoin started when Grayscale won the case against the US Securities and Exchange Commission (SEC) to convert Grayscale Bitcoin Trust into a spot Bitcoin ETF.

Considering that the BTC supply has been active for more than 6 months, a peak in this measurement is usually associated with an increase in active volume during either a bull market scenario or a selling environment.

What Could Be the Next Step for BTC Price?

The Grayscale case victory came after a historic decision in the altcoin field in the form of the XRP case Summary Judgment. This happened during the rush of major financial institutions like Blackrock to request approval from the US SEC for a spot Bitcoin ETF. These developments kept investor sentiment positive, but it remains to be seen whether the momentum of the US macroeconomic environment will continue.

Despite the high volatility surrounding the FOMC decision due to the optimism around the monetary policy easing around interest rate cuts or pauses since the beginning of 2023, Bitcoin’s volatility around the FOMC decision has slowed down. However, participants in the CME FedWatch Tool recorded a 98% probability of the Fed not changing the current target interest rate of 525-550 basis points ahead of the Federal Open Market Committee (FOMC) meeting scheduled for September 19-20, 2023.

In the past two years, aggressive interest rate hikes by the central bank have caused high volatility around the FOMC decision. However, the trend has slowed down since the beginning of 2023 with the optimism around interest rate cuts or pauses in the monetary policy easing.