Bitcoin was back above $47k earlier today. The largest cryptocurrency by market capitalization spent most of the last three months in a bearish bias with the index only breaking out a couple of weeks ago. Now on-chain data shows that the bull market may continue on with its bull run and post new highs in the process.
Bitcoin’s Latest Price Breakout
The recent market activity was a massive factor in raising the index to around $48k. More than $700 billion increase in valuation was experienced during this time and the entire market reaped benefits of this massive influx of money, not just Bitcoin. According to some analysts, the altcoin market also experienced a considerable appreciation in response to Ethereum’s major update called the London hard fork. The major update resulted in Ethereum regaining some of its lost momentum and going above $3k. The altcoin market responded with Ripple (XRP), Cardano (ADA) and several top cryptocurrencies recording major gains. The total market capitalization of the entire industry has also crossed $1 trillion in total valuation in the process.
The On-Chain Data
Bitcoin’s price index often depends on the supply-demand situation in the market. If more people are holding on to their crypto and not liquidating it, it results in buying pressure on the digital asset and as a result the price goes above. On the other hand, if more Bitcoin is entering the market than the capital entering the market, it results in some selling pressure which in turn drives the price index down.
Recently, several on-chain statistics show that both long-term investors and miners are holding on to their crypto at the moment. For the miners it makes sense because the price index has nosedived from a high of around $65k and they are willing to hold on to it to wait the current bearish mood out.
What to Bitcoin Analysts Say?
According to analyst Kadan Stadelmann who works at Blockchain solutions provider Komodo, both whales (big holders) and miners are holding on to their crypto. This is creating a supply shock which in turn is driving up the prices. That, however is short-term sentiment. According to a long-term metric, Bitcoin’s supply owned in the hands of HODLers is nearing an all-time high with a whopping 82.6% of the entire supply in long-term wallets. The supply of short-term holders has declined, resulting in further pressure on the bears.
According to analytics website Glassnode, when the amount of Bitcoin is short-term wallets goes below 20%, a supply squeeze occurs that results in massive gains for the cryptocurrency. Bitcoin’s transactions are also now dominating the entire crypto sector, another good news for the overall bull market.
Image Source: Marco Verch Professional under CC