Bitcoin’s rally looks to have legs as the ascent is backed by a pickup in blockchain activity and a long-term technical indicator which is about to turn bullish.
-
While bitcoin has gained 30% this month, the user activity on the network, as measured by the seven-day average of the number of active entities, has increased 19% to 284,179, according to data provided by Glassnode.
-
An increase in network adoption along with a price increase is said to confirm the uptrend.
-
According to Glassnode, “more active market participants has historically correlated with growing interest in the asset during early-stage bull markets.”
-
Glassnode defines active entities as a “cluster of addresses controlled by the same network entity.” The metric includes both businesses like exchanges and custodians and individuals.
-
The current tally of active entities is the highest in five months and at par with the number observed at the beginning of the bull run in late 2020.
-
Institutional participation has increased along with network adoption, as evidenced by the uptick in the median size of on-chain transactions from 0.6 BTC to 1.3 BTC since September.
-
“An increased typical transaction size is not synonymous with price appreciation, but indicative of larger and even institutional sized capital flows present on-chain,” Glassnode said, adding that the dollar value of transaction size has also increased.
-
The technical outlook appears to be in sync with the bullish on-chain data, with the 100- and 200-day moving average (MA) on track to print a bullish crossover in the next few days – the first in 16 months.
-
A bull cross occurs when a particular moving average crosses above another average tracking a relatively higher number of backward-looking data.
-
The impending bull cross of the 100- and 200-day MAs is widely taken to represent a long-term bull market and may soon invite stronger chart-driven buying pressure.
-
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 MAs in early May 2019.
-
Moving average crossovers, whether bullish or bearish, are not always reliable. These are lagging indicators and sometimes trap traders on the wrong side of the market. For instance, bitcoin bottomed out near $30,000 following the confirmation of the bear cross of 100- and 200-day MAs can mid-July.
All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by CoinDesk constitutes an investment recommendation, nor should any data or Content published by CoinDesk be relied upon for any investment activities. CoinDesk strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.
Recommended Content
Editors’ Picks
Ripple's move above this key level could trigger nearly 50% rally for XRP
Ripple has overcome a critical resistance level and flipped into a support floor on the weekly time frame. This development happened while XRP tightly consolidated for roughly 250 days. Investors can expect XRP to kickstart a massive rally.
Optimism price outlook with nearly $90 million worth of OP tokens flooding markets on Friday
Optimism volatility has shrunk in the ours leading to the network’s cliff unlock. It joins the likes of dYdX and Sui, which have similar events on their calendars. As token unlocks are often considered bearish catalysts, investors should brace for a reaction after the event.
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: Retail watches from the sidelines with a bias for shorts
Bitcoin could clear $73,777 peak as BTC bulls resurface. Ethereum might fall 10% before next leg up as ETH RSI teases with sell signal. XRP could lose $0.6000 threshold as Ripple bulls fail to show up.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito price action shows a potential cup and handle formation. Based on theoretical measurement rules, a successful breakout could yield a 56% rally to $6.0. A breakdown of the $3.86 support level would create a lower low for JTO and invalidate the bullish thesis.
Bitcoin: BTC may have recovered, but is it out of the woods?
Bitcoin’s (BTC) upward momentum has shown a significant decline for the past two weeks or so. This development led to a bearish signal on the weekly and an uncertain outlook on the monthly.