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December 5, 2022
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Guide & Analysis

4 reasons to be optimistic when bitcoin exceeds $40,000

With BTC price regaining traction, here are 4 reasons to be bullish when bitcoin exceeds $40K.

While bitcoin has already added $10,000 in value in one week to $40,000, some resources on the network suggest even more optimistic developments waiting around the corner. From Stablecoin Ratio to increasing active addresses for companies that buy and holders still own.

Reason 1: Bitcoin Reason for Establishcoin

Accordingly with data from CryptoQuant, the Bitcoin to stablecoin ratio oscillator has entered bullish territory. This metric highlights the ratio of the number of bitcoins to stablecoins stored across all exchanges.

The analytics company said that this metric has a “perfect BTFD hit rate since 2019“. CryptoQuant encouraged BTC bulls by adding: “he just printed another buy sign”, as the stablecoins present on the exchanges far outweighed the bitcoins, suggesting more potential purchases.

It’s important to note that the rate of delivery of Bitcoin Stablecoin, which works in a similar way, has also been decreasing in recent months.

Reason 2: Is the fund in?

Jurrien Timmer, Global Macro Director at Fidelity Investments, also commented on the recent evolution of BTC prices. In fact, he believes the massive drop in prices to $30,000 was really rock bottom.

He reached this conclusion by comparing the BTC/USD chart with the GS Retail Favorites Basket. History shows that the correlation between the two has been relatively high, suggesting that bitcoin could indeed mimic the basket’s performance.

Bitcoin price compared to GS Retail. Source: Twitter

Reason 3: companies keep buying, institutional praise

While some reports suggested short-term investors were selling their BTC holdings during the recent crash, others just doubled. This is the case with MicroStrategy.

Michael Saylor’s NASDAQ-listed business intelligence giant plans to allocate another $1 billion in the primary cryptocurrency after a new share offering.

The executive, who became one of BTC’s most prominent bulls last year, took him to Twitter to warn those who plan to have 5% of their portfolios in assets that the remaining 95% will be “demonetized by bitcoin”.

Interestingly, he was referring to Paul Tudor Jones III. The prominent hedge fund manager, who outlined the benefits of the BTC more than a year after the COVID-19 pandemic began, praised the cryptocurrency again during a more recent interview.

He compared it to mathematics, which has been around for thousands of years and will remain here for thousands more. Consequently, Jones wanted to increase his stake in BTC to represent 5% of his portfolio. These praises coming from one of the most successful investors of this generation can, in fact, be seen as a bullish signal.

Reason 4: Hodlers Continues Hodling

In his weekly analysis of the market, Glassnode addressed the role of so-called HODLers – investors who have bought their assets before a specific date and refuse to sell or even trade them.

In this case, the analysis company analyzed long-term holders who “include all coin buyers before January 10, 2021.

The Glassnode graphic below shows that “a large volume of coins was purchased at the start of the bull market and remained largely unspent. The current maturation rate is over 400k BTC/month, which is much higher than the 160K BTC we estimate to have been sold, mainly by short-term holders, during the May capitulation event.

Behavior of long-term Bitcoin holders. Source: Glassnode

And, perhaps a bonus reason is the active addresses on the Bitcoin network. This activity is usually tied to the price of BTC, with the general rule suggesting that the more users who use the blockchain, the higher the performance.

Active addresses have recovered from the early-June low of 715,000 of these portfolios to just one million. It’s still well below the mid-April high of 1.4 million (interestingly, the BTC was heading towards its latest ATH at that point), but the ten-day rise can still be considered bullish.

Source: CryptoPotato

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