Bitcoin is poised to rally above $30,000 for the first time since June 2022. As excitement abounds, how are indicators looking for the asset both on-chain and off-chain?
Crypto market intelligence platform Santiment recently analyzed some observable impacts and triggers of Bitcoin’s latest price movements, looking at increasing social volume and dominance compared to other cryptocurrencies.
Bitcoin dominance returns
For blog post From Santiment on Thursday, Bitcoin’s social volume and social dominance have now reached their highest levels in an entire year.
Social domain refers to the proportion of discussions in crypto media that refer to Bitcoin. Meanwhile, Social Volume measures the number of text documents mentioning assets, including Telegram messages and Reddit posts, among other things.
Both metrics seemed to rise precisely as Bitcoin soared back above $25,000 earlier this month, when the Federal Reserve agreed to bail out all Silicon Valley Bank (SVB) depositors. Market enthusiasm has also increased again, with Crypto Fear and Greed Index reaching a “greed” score of 63 as of Friday.
However, Santiment cautioned against over-enthusiasm, noting that such fervor “generally indicates a local cap.” She also drew attention to Bitcoin trading volume which, while strong during its recent rally to $27,000, has now pulled back on a price divergence.
“We are now seeing a divergence in price and volume, which is generally not good, as it indicates exhaustion in price action,” Santiment wrote.
old coins in motion
The firm also discovered that there have been spikes in movement between “dormant coins” (Bitcoin transaction outputs that have not moved in the last 5 years) since mid-March. Each spike involved between 2,800 and 3,000 BTC, which Santiment believes could show that a certain whale is “nerved” by recent price action.
the united states government filed a note on Friday claiming that it had sold more than $200 million of its Silk Road Bitcoin holdings on March 14. Santiment also argued that the moves could be related to the CFTC’s recent lawsuit against Binanceor other crackdowns related to cryptocurrencies.
The company’s MVRV-Long/Short Difference metric shows that long-term holders are beginning to show higher unrealized gains than short-term holders at current price levels. This reversal indicates a similar pattern to 2019.
“If history repeats itself, then we could see a sharp local top spike and a terrible 2019-like indentation,” the firm wrote.
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