The Active Supply of Bitcoin Reaches Its Highest Level in the Last 6 Months! Is This a Good Thing?

• In the past 30 days, despite developments related to Bitcoin price movements, spot Bitcoin ETFs, and significant crypto lawsuits such as Grayscale, the market has been largely dominated by sideways movement.
• Over the past 6 months to 1 year, the amount of active supply, based on a 1-day moving average, has now reached the highest level in the last 6 months, according to Glassnode data.
• Participants in the CME FedWatch Tool recorded a 98% probability that the Federal Reserve Open Market Committee (FOMC) would not change the current target interest rate of 525-550 basis points ahead of the FOMC meeting.

What does active supply & FOMC meeting indicate for Bitcoin’s sideways market movement? Analyze the implications on our post.

Bitcoin Shows an Increase in Active Supply

In the past 30 days, despite developments related to Bitcoin price movements, spot Bitcoin ETFs, and significant crypto lawsuits such as Grayscale, the market has been largely dominated by sideways movement. However, on-chain data indicates that the current BTC trading model exhibits inherent strength in terms of the trader lifecycle.

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

Considering that BTC supply has been active for more than the last 6 months, a peak in this metric is usually associated with an increase in active volume during two types of events: a bullish market scenario or a selling environment.

What Could Be the Next Step for BTC Price?

The victory in the Grayscale case came after a historic decision in the altcoin space, summarized as the XRP case Summary Judgment. This happened as major financial institutions like Blackrock rushed to request approval for spot Bitcoin ETFs from the U.S. SEC. These developments kept investor sentiment positive, but it remains to be seen whether the momentum of the U.S. macroeconomic environment will continue.

While Bitcoin exhibited high volatility around the FOMC decision due to optimism surrounding monetary policy easing around interest rate cuts or pauses in the policy environment since the beginning of 2023, the high volatility around the FOMC decision appears to have slowed down. Participants in the CME FedWatch Tool recorded a 98% probability that the Federal Reserve Open Market Committee (FOMC) would not change the current target interest rate of 525-550 basis points ahead of the FOMC meeting scheduled for September 19-20, 2023.

In the past two years, aggressive interest rate hike measures by the central bank led to high volatility around the FOMC decision. However, the trend has slowed down since the beginning of 2023 with optimism around interest rate cuts or pauses in the policy environment.