number of transactions recorded on Bitcoin According to data from crypto analytics firm Glassnode, blockchain volumes jumped to nearly 300,000 on Saturday, January 14, the highest level since April 2021. Just a few weeks ago, daily transactions were as low as 240,000.
The surge in activity on the bitcoin blockchain coincides with a recent surge in the price of the world’s largest cryptocurrency by market capitalization. BTC/USD was last changing hands at $21,100, according to TradingView citing Coinbase exchange data. This means that the cryptocurrency is currently trading about 28% higher this month.
Traders attributed gains in bitcoin and the broader cryptocurrency market to macro tailwinds, including easing US inflation concerns after the latest CPI and jobs reports and fresh evidence of a slowing US economy, the combined effect of which fed traders on tightening Fed. Encouraging you to dial. Bets for this year and next.
Bitcoin and cryptocurrencies perform when financial conditions are easy and, as a result of macro tailwinds, alternative.me’s bitcoin fear and greed index Has consistently moved out of fear (i.e. above 50) for the first time since last April.
of bitcoin latest boom Last Friday saw a wave of short position liquidations, reaching $141 million in a single day, the most in at least three months, according to data from CoinGlass.com.
According to Coinglass.com, the latest rally resulted in a slight increase in bitcoin funding rates on major cryptocurrency exchanges. According to CoinGlass.com, “Positive funding rates suggest that speculators are bullish and long traders are paying funds to short traders”. But the small jump in BTC funding rates was small compared to the massive drop in funding rates seen in the immediate aftermath of the FTX collapse in early November.
What does increasing trading mean for the price of bitcoin?
Some cryptocurrency bulls will be hoping that the recent surge in transactions on the bitcoin blockchain could reflect an increase in demand for the coin, and that increased demand could help propel the price in the weeks and months ahead. However, other on-chain metrics do not support this thesis.
Despite a spike in transaction numbers, the total value of bitcoin transferred across the blockchain remains near a multi-year low, according to Glassnode data. 16 on mondayth In January, transfer volume was just over $17.3 billion, still well below its pre-FTX collapse levels.
While there may be more individual transactions, not much value is being transferred across the network, this data shows. Meanwhile, the number of bitcoin addresses with non-zero balances has remained largely unchanged in recent weeks at just over 43.13 million, after falling following the collapse of FTX two months ago.
This suggests that the accumulation of bitcoin by new buyers is not driving the increase in recent transactions. So does all this suggest that the latest bitcoin rally is overdone?
Not necessarily, but it does suggest that on-chain data is not yet indicating an imminent continuation of the bullish market. Indeed, technicians have noted that bitcoin’s failure this week to recapture key resistance at $21,500 combined with bearish market conditions fueled short-term gains, according to the 14-day Relative Strength Index (RSI). takes the risk of taking The pullback was driven below the $20,000 level.
In case of a drop below $20,000, analysts will be closely watching how bitcoin reacts to a retest of its 200-day moving average at $19,500 and a true value of $19,700. if bitcoin could Hold A break above both of these key levels, analysts believe, could be a sign that the 2022 bear market may be over.
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