Bitcoin’s recent rally seems corroborated by the increased activity in blockchain activity, which might signal “growing interest in the asset during early-stage bull markets,” a new analysis notes.
The Bitcoin market has continued to show strength this week, with prices trading within a tight consolidation range, with a low at $53,657, and a high of $56,250, according to a new Glassnode analysis. Glassnode adds that following an impressive rally from the September lows, the market has managed to hold onto the gains whilst on-chain activity has commenced a welcome climb higher.
“Active entities, the count of individual participants on-chain each day, has grown 19% to this week, reaching around 291K active entities per day,” according to the report. “This value is on par with counts from late 2020 at the beginning of the last bull run. More active market participants has historically correlated with growing interest in the asset during early stage bull markets.”
Coindesk reports that this signals a bull cross, which occurs when a particular moving average crosses above another average tracking a relatively higher number of backward-looking data, representing a long-term bull market.
A 10-month bull run from $8,300 to $64,801 followed the previous bullish signal confirmed in June 2020. The cryptocurrency nearly doubled to $13,880 after the bull cross of 100- and 200-day moving averages in early May 2019, according to Coindesk.
Ron Levy, CEO and co-founder of The Crypto Company, tells GOBankingRates that impending ‘bull crosses’ are a sign of upcoming value spikes for Bitcoin and other cryptocurrencies.
“While Bitcoin and cryptocurrencies can still be considered on the fringe of traditional investing, it’s clear that they’re becoming more and more popular, and in a sense, matching traditional stock value as we’re seeing growth reports today,” Levy says.
“Since its beginnings, Bitcoin – which is an indicator of cryptocurrency value as a whole – has seen unprecedented spikes in value. With the 19% increase in user activity in the space and as cryptocurrencies year-over-year become more common investments, the value of Bitcoin, Ethereum, altcoins and others will continue to climb,” he adds.
Levy explains that although typically golden crosses of any variation are a lagging indicator, they serve value to those who trade moving average crosses.
“Higher highs on the daily and higher highs on the weekly, with volume, confirm buyers are interested,” he says. “In addition to a plethora of other bullish sentiment – with everything from institutional backing, regulatory green lights and retail adoption — I think the real challenge would be to find reasons why Bitcoin will NOT continue with upward bullish momentum.”
Glassnode also notes that further supporting the increase on-chain activity, the supply held by Long-Term Holders (LTH) is showing no signs of slowing down.
“Over the last 7-months, HODling behavior has dominated and over 2.37M BTC have migrated across the Short-to-Long Term holder threshold (~155days). To put this into context, only 186k BTC have been freshly mined in that same period, meaning LTHs have HODLed 12.7x more coins than have been mined on average,” according to the report.
As GOBankingRates reported earlier this week, despite 2021 continuing to be a wild ride for cryptos — and Bitcoin especially — and naysayers who see it as a passing fad, Bitcoin is the best performing asset so far this year, beating both stocks and commodities.
“After the strong Q3 performance Bitcoin is now up 49.1% year-to-date,” Bitcoin tweeted in regard to NYDIG data.
Some market participants are more tempered in their view of Bitcoin.
“Bitcoin and other cryptocurrencies could continue to trade well as many investors are using it as an inflation hedge,” Jay Hatfield, founder and portfolio manager at Infrastructure Management, tells GOBankingRates. “Owning actual gold is an ineffective hedge against inflation as its price is driven more by moves in the dollar and interest rates rather than inflation expectations. In addition, when the Fed ends QE in 2022 and starts raising interest rates, inflation expectations are likely to drop which may impact the value of cryptocurrencies.”
More From GOBankingRates