Don’t underestimate the growing irrelevancy of macro on-chain analysis

The first four months of 2022 have been dull in the bitcoin market. Bitcoin has traded in prolonged consolidation, floating around 40k for the entire year in lockstep with tech stonks. Trading volumes have dried up completely, and activity in the derivatives market has been muted, with traders mainly focusing on hedging. This has created a rampant environment for pushing bullish narratives backed by on-chain data.

Charts drilling down to supply age and exchange balances offer convincing stories of accumulation patterns, hodler activity, and a vanishing liquid supply. While both the patterns and the narratives revolving said patterns hold historical acclaim, this type of macro on-chain analysis is getting increasingly less relevant with time. It mostly serves one purpose only, providing us with that sweet sense of hopium. Let me elaborate on why.