Posted 6 months ago | by @devadmin
A Coinmetrics report states the bullish case for Bitcoin expressing that on-chain fundamentals are hinting at the number one cryptocurrency experiencing its biggest breakout this year. The report perceives that Bitcoin is already showing signs of this coming move following its rise by about $1,000 in one day on October 21st. The digital asset has subsequently set a new all-time high for the year reaching $13K.
The report cautions though that predicting Bitcoin’s future value due to its volatility is impossible. The authors also note there is a difference between previous bull runs and the current beginning of this one. According to Coinmetrics, “BTC has been growing in ways that we have not seen in previous bull runs,” referencing big institutional players and Paypal recently jumping into cryptocurrency, as Bitboy Crypto reported.
The authors further point to Bitcoin’s growing correlation with gold as one of the reasons for their bullishness on the number one cryptocurrency. In the report, the authors state Bitcoin, which has had a low correlation with both gold and the U.S. dollar throughout most of its history, changed after March 12th.
The authors of the report speculate:
“As panic over Covid-19 rapidly set in, equities around the world crashed. Crypto went down with the rest of the markets, with BTC and ETH price both dropping about 50%. Since then, BTC’s correlation with gold has been near all-time highs while it’s correlation with the dollar has been at all-time lows.”
The report also signifies another important signal, “the percent of supply held for at least one year (or in other words, the percent of supply that has not been moved on-chain as part of a transaction).” According to Coinmetrics, “as of October 25th, about 62.5% of the total BTC supply had been held for at least 1 year, which is close to all-time highs.”
As precedent shows, “the percent of supply unmoved for at least 1 year has peaked during periods where price has been at local lows.”
The report adds:
BTC’s velocity is also at its lowest levels since 2011. Velocity measures the number of times an average unit of supply has been transferred in the last year. High velocity means a relatively high turnover. A decreasing velocity suggests BTC is trending towards being used as a store of value as opposed to a medium of exchange.
Another metric that suggests a pending Bitcoin breakout is coming is the “number of addresses holding at least $100 worth of BTC (which) hit a new all-time high of 9.74M on October 22nd.”
Summing-up the report the authors believe that historically, “bitcoin price has hit a local peak within 1.5 years of each previous halving.” As holding activity increasing and the “halving less than six months in the rearview, all signs are signaling that BTC is poised for takeoff.”
Bitcoin briefly touched 14K for 2 hours before falling slightly under the key price point prior to this report being published.
Bitcoin is currently trading at [FIAT: $13,815.67] UP +2.0% in the last 24 hours according to Coingecko at the time of this report.