The volume of Bitcoin on-chain transfers keeps rising as BTC has hit a new historic peak of $58,400

According to Santiment, while BTC reached a new all-time high earlier today and touched the $58,400 level, the volume of Bitcoin on-chain transactions keeps rising.

Bitcoin on-chain volume matches that of January 2018

Santiment analytics team has taken to Twitter to announce that, while the world’s flagship cryptocurrency has tapped another consecutive all-time high of $58,355, the volume of Bitcoin on-chain transactions continues to rise.

As per the tweet, the recent daily average value was close to $28 billion, which is similar to the on-chain BTC volume seen in January 2018—the period after Bitcoin hit $20,000 for the first time and the start of the so-called crypto winter that lasted for about two years.

As for the previous all-time high, on Saturday, Bitcoin sprang above the $57,000.

On-chain transfers are verified and recorded on the blockchain. Off-chain transactions refer to purchases of small things with cash or spending money via payment systems such as PayPal.

Another analytics aggregator, Glassnode, has reported that several other Bitcoin on-chain fundamentals have also improved and are showing a rise.

According to its tweet, the value of Bitcoin moving out of crypto exchanges has hit a one-month high of $102,299,130.40.

On Sunday, this high totaled $102,157,190.39.

Now, financial institutions and retail holders are withdrawing BTC into cold storage vaults and experts are expecting a Bitcoin liquidity crisis soon.

In the meantime, the number of Bitcoin wallets making a profit has spiked to a one-month high of 99.4 percent, and the number of non-zero BTC wallets has hit an all-time high of 35,502,504. So far, 2021 has been good for Bitcoin as more and more big financial institutions are getting into it.

Tesla has bet $1.5 billion on BTC, and MicroStrategy has raised another $1.3 billion from shareholders to purchase more Bitcoin. The amount of crypto assets under the management of Grayscale Investments now totals $40 billion, which is a double rise since the start of the year.

JPM analysts argued that the growing illiquidity could propel even more slumps

JPMorgan strategists have supported the narrative that Bitcoin is in a liquidity crisis. However, instead of highlighting it as a potential catalyst for further price increases, they warned that the asset could experience a sharp price drop just as quickly.

Bitcoin reached yet another record during the weekend with a new all-time high of $58,400 on Bitstamp. However, the price corrected somewhat sharply, and BTC lost over $4,000 of value in a matter of hours and dipped to $54,000.

Analysts from the giant US multinational banking institution, JPMorgan Chase & Co, suggested that these developments could have been expected due to BTC’s sharply declining liquidity. They referred to the bitcoin purchases from Tesla, MicroStrategy, and other giant corporations and institutions, while the number of newly-created tokens dropped in the middle of 2020 following the third-ever halving.

The strategists wrote that the market liquidity is currently much lower for Bitcoin than in gold or the S&P 500, which implies that even small flows or inflows could have a significant price impact.

Interestingly, the narrative that BTC is in a liquidity crisis has been discussed in the community before as well. However, the primary sentiment is that such developments are ultimately beneficial for the asset.

Basic economic rules dictate that if the supply of an asset decreases, while the demand stays the same or increases, the price should, in theory, rise.

Glassnode CT Rafael Schultze-Kraft recently highlighted this in a report by breaching the adjusted circulating supply, the depletion of funds from exchanges, and the institutional adoption. He classified this data as extremely bullish for the cryptocurrency.

You can see the BTC price here.

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