Wednesday, August 4

4 Reasons to Expect Bitcoin (BTC) Rise

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Bitcoin (BTC) price gained momentum and once again surpassed $40,000. According to on-chain data from leading cryptocurrency platforms, there are 4 reasons to expect a rise. According to Jordan Lyanchev of CryptoPotato:

Reason 1: Bitcoin/Stablecoin Ratio

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According to data from CryptoQuant, the Bitcoin/stablecoin ratio oscillator has entered bullish territory. This metric highlights the ratio of the number of Bitcoins stored on all exchanges to stablecoins.

The analytics company says this metric has “an excellent BTFD hit rate since 2019.” CryptoQuant encouraged bullish proponents, saying that stablecoins standing on exchanges “just formed another buy signal” as they go far beyond Bitcoins and signal more potential purchases.

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Kaynak: CryptoQuant

It is worth noting that the Bitcoin Stablecoin Supply Ratio, which works similarly, has been on the decline for the past few months.

Cause 2: Bottom Ended?

Jurrien Timmer, Global Macro Director at Fidelity Investments, also commented on the latest price developments in BTC. In fact, he believes the massive price drop towards $30,000 is actually the bottom.

Timmer came to this conclusion by comparing the BTC/USD chart with the GS Retail Favorites Basket. History shows that the correlation between the two is relatively high, suggesting that Bitcoin can truly mimic Basket’s performance.

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Source: Fidelity

Reason 3: Companies Keep Buying

While some reports suggested that short-term investors sold their BTC holdings during the last big drop, others like MicroStrategy continued to increase their holdings.

Michael Saylor’s NASDAQ-listed software company has announced that it plans to dedicate another $1 billion to the leading cryptocurrency after a new stock offering.

The executive, who is among the most prominent BTC supporters, tweeted that to those who plan to hold 5% of their portfolio in assets, the remaining 95% will be “put out of circulation by Bitcoin”.

Interestingly, Saylor was talking about Paul Tudor Jones III, and the leading hedge fund manager, who outlined the benefits of BTC a year before the COVID-19 outbreak broke out, once again praised the cryptocurrency in an interview with CNBC yesterday.

Jones compared this to the math that has been here and will be here for thousands of years. As a result, Jones said he wants to increase his BTC holdings to represent 5% of his portfolio. Such praise from one of the most successful traders of this generation could indeed be seen as a bullish signal.

Reason 4: BTC Holders Keep HODLing

In its weekly review of the market, Glassnode touched on the role of HODLers, investors who buy their assets before a certain date and refuse to sell or even trade them. The analytics firm examined long-term holders that “include all cryptocurrency buyers before January 10, 2021.”

The chart below from Glassnode shows that in the early bull market a huge amount of cryptocurrencies were bought and largely left unspent. Also, the current maturation rate reveals over 400k BTC per month which is much higher than the 160k BTC we estimated were mostly sold by short-term holders during the capitulation that took place last month.

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Kaynak: Glassnode

Active wallets on the Bitcoin network can be cited as a bonus reason. This activity is typically linked to the price of BTC, and the general rule suggests that the more users using the blockchain, the more bullish performance occurs.

Active wallets have jumped from a low of 715,000 at the beginning of June to just under a million. It’s still well below the mid-April high of 1.4 million (interestingly, BTC had its last ATH at the time), but the ten-day increase can still be considered bullish.

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