These 3 Metrics Suggest Bitcoin Is Building Up Bullish Momentum
- Bitcoin is finally rallying after weeks of flatlining in the low-$9,000s and high-$8,000s. As of this article’s writing, the asset trades for $9,750 — the highest price in about a month.
- Volatility remains low on a macro scale, according to analysts and volatility indicators. This indicates the asset will soon see a strong breakout.
- A senior analyst at Into The Block, a blockchain analytics and data firm, says there are signs that this breakout will be a bullish one.
From a macro perspective, Bitcoin remains in between a rock and a hard place despite its rally towards $10,000. The asset remains below the $10,000-10,500 macro resistance yet still above the $8,500-8,800 support that would result in another downtrend if it is broken below.
Yet analysts are observing that multiple metrics indicate Bitcoin has room to move higher.
Bitcoin Has Room to Rally, Predict Metrics
According to Lucas Outumuro, a senior analyst at Into The Block,”@intotheblock on-chain and derivatives indicators signal bullish momentum building up.”
Outumuro specifically cited three indicators, which are as follows:
- The total number of Bitcoin addresses with coins in them has recently reached a new all-time high “after stagnating for three months.” The metric has reached approximately 30.96 million addresses.
- “Bitcoin’s proposition as a store of value is strengthening as the number of long-term investors (hodlers) has been steadily increasing all year.” More than 62% of all BTC in circulation has now been held for a year or more. This is crucial for the bull case as the last time this much HODLing was seen, the market began the rally from $1,000 to $20,000 in a year.
- Bitcoin’s derivatives open interest has surpassed a new all-time high, suggesting a potential increase in institutional investor demand/volume. As Outumuro wrote: “The total open interest in main perpetual swaps contracts surpassed $2.50 billion for the first time. As Bitcoin’s price has increased 5% this week, perpetual swaps open interest has grown significantly more (13%) pointing to the likelihood of institutional investors going long.”
Bitcoin’s proposition as a store of value is strengthening as the number of long-term investors (hodlers) has been steadily increasing all year pic.twitter.com/Z2LZIqs0ri
— Lucas Outumuro (@LucasOutumuro) July 25, 2020
This comes shortly after Ki Young Ju, the CEO of Crypto Quant, mentioned three other on-chain metrics signaling Bitcoin is a “BUY” at the moment.
Ethereum, the Trailblazer of the Bull Run?
While Bitcoin’s recent gains and momentum has been impressive, BTC is strongly underperforming Ethereum. The second-largest cryptocurrency is up approximately 25% in the past five days alone, having benefited from an influx in the adoption of DeFi.
Analysts say that this discrepancy between Bitcoin and Ethereum suggests the former will eventually rally. After all, on multiple occasions over recent years, ETH has led BTC on pivotal breakouts.
Whether or not Bitcoin will one-to-one track Ethereum, though, remains to be seen.
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