Bitcoin bull run 

According to new data, an increasing number of people decide to “hodl” bitcoin by storing it in their wallets instead of moving it to exchanges for trading. This not only supports the general bullish sentiment in the crypto market, but also suggests that the next bull run may surpass the previous ones, as indicators show higher levels of hodling activity than observed during preceding bull markets.

On-chain analyst Willy Woo 

The data regarding hodling levels come from the on-chain analyst Willy Woo, who researched an indicator called “reflexivity”. The indicator measures market sentiments expressed in crypto investors’ preference to hodl their BTC as the bitcoin price rises. Reflexivity evaluates how valuable the retail investors predict their bitcoins to become, and as such it’s a great market of whether the current market sentiment is bullish or bearish. Currently, the indicator clearly points to a univocally optimistic outlook among investors.

Investors are holding on to their BTC 

One of the reasons why bitcoin owners are unwilling to part with their BTC at the time is the fact that many people expect a post-halving bull run to happen in 2021. The most recent halving happened on May 11, 2020, and historically bitcoin is known to rise in price for 12-15 months after each halving. Since a bull rally is expected to happen soon, most of the investors are unlikely to sell their bitcoins in the next few months.

BTC holders' unwillingness to sell their coins has been reflected in bitcoin price’s refusal to go below $10,000, even in light of negative happenings. The recent event where BitMEX was charged by the U.S. Commodities and Futures Trading Commission (CFTC) with violating the Bank Secrecy Act didn’t manage to affect BTC in a meaningful way - although bitcoin price went a little bit down at first, it immediately resurged to the previous level.

Reflexivity 

According to Willy Woo, bitcoin’s reflexivity indicates that the current bullish sentiment might be even stronger than during previous bull runs. Woo mentions that the current bull cycle differs from the preceding ones because “reflexivity is increasing rather than static compared to last cycles”.

Signals indicating a strong BTC bull run 

One of the reasons why the next bull run might surpass previous ones is the fact that aside from the recent halvening, fundamental analysis points to bitcoin dealing with the economic aftermath of COVID-19 pandemic in a superb way. Not only has the pandemic not managed to negatively affect BTC,but  in fact it can be seen as one of the factors contributing to the rising bitcoin price. As people grow worried about a possible economic crisis and increasing inflation, they look to bitcoin as a safe haven asset and a hedge against an uncertain future. 

Willy Woo’s analysis of bitcoin’s reflexivity is one of many positive indicators noted by analysts within the past few weeks. Along with other technical markers as well as strengthening fundamentals, it points toward a possible massive bull run incoming in the near future.

Bitcoin price up 

Image source: pixabay.com

Key Bitcoin indicators show that the cryptocurrency may be in for a big bull market in the near future. The last time this happened was back in 2017 when Bitcoin rose to its all-time high value i.e. $20,000 and shattered all previous records. Currently trading at around $11,000, Bitcoin is likely to set a new all-time high target this time around, possibly much more than the $20,000 itself, perhaps several times more than that!

Recent Happenings

Last month was a pretty passive one for the Bitcoin industry. The whole month saw a see-saw of price movement largely between $10,300 and $11,000 rarely looking to either scale the 11k figure or drop below the $10,300 one. So, it was a pretty uneventful month. However, despite this slow month, there is considerable anticipation around the near future of the cryptocurrency sector especially Bitcoin’s. It has been a historical phenomenon that Bitcoin moves violently either upwards or downwards after prolonged periods of consolidation and the nature of the breakout remains proportional to the time elapsed by the consolidation process. Currently, Bitcoin has stuck between sideways trading for more than 3 months between the $10,000 and $12,000 figure with no serious movements above and below. So, the longer this period of consolidation occurs, the bigger price movements we can expect in the near future. Now the price could move in the downward direction as well theoretically which would invite sellers to go on a massive price dump while buyers can take advantage of it. But, according to latest indicators and technical studies, the upside move has a much larger probability of happening rather than the downside. The recent move from $10,300 to $11,000 shows that the bullish intent is still strong despite the bulls apparently losing steam over the last 3 months and failing to push the price above the long-term price barrier of $12,500. 

Key Bullish Indicators

Accumulation of Bitcoin Outside Exchanges

Cryptocurrency exchanges are spot trading facilities for users around the world. The number of Bitcoin being held there is often used in day trading and as a result, it can be safe to assume that this amount is not generally used in HODLing. Now recently, the amount of Bitcoin being stored in the wallets of these exchanges has seen a drastic cut. This means that instead of using their Bitcoins for trading, users are moving them to personal wallets for long-term HODL and that always creates a buying pressure on the cryptocurrency price index. According to top crypto analyst websites Glassnode and CryptoQuaint as well as famed analysts like Willy Woo, this accumulation means that there is an increased demand for Bitcoin as a long-term asset. 

Woo tweeted:

“When coins on spot exchanges drop, it's a sign that new buyers are coming in to scoop coins off the markets and moving them into cold storage HODL, we are seeing new HODLers right now. Very macro bullish.”

But, the flight of Bitcoin from these traditional exchanges can also meant that the amount is moving to other types of exchanges like for example the decentralized exchanges like UniSwap and others but that is not the case according to analysis from CryptoQuaint. It states that the current exodus from exchanges like BitMEX is among the mix but instead of the crypto moving to other exchanges, most of it is migrating to personal wallets. This behaviour was also witnessed back in 2017 before the start of the big bull run that resulted in a price appreciation to the historic $20,000 high. So, safe to say that if this trend continues, we will have more Bitcoin in long-term positions and therefore the actual exchanges will have less crypto overall, thus creating a heavy demand for Bitcoin in the near future. 

Record New Bitcoin Addresses being Created

In addition to accumulation of Bitcoin, new addresses being created in the Bitcoin network have also reached record high levels. Normally, the new addresses are between 5,000-10,000 new addresses every day but, recently, they have increased more than 100% with figures as high as 22,000 reported. This figure is in part fueled by the Chinese government’s new public advertising campaign to raise awareness about the new sector but whatever the reason may be, it seems that more and more people are now interested in the crypto world and are looking to open their accounts with the new public addresses. 

The newly created Bitcoin addresses are nearing 2-year highs and that will definitely drive the price further upwards even if the new addresses make only small purchases of the cryptocurrency. The Chinese advertisement regarding the sector shows an inclination of the Asian government to open up the country for the sector which has a blanket ban right now especially for domestic use. 

The DeFi Slump Diverting Money to Bitcoin

The biggest story in 2020 in the crypto sector was that of the Decentralized Finance applications sweeping the place. Platforms like UniSwap have become increasingly popular because of their decentralized nature and ability to list any project without the usual scrutiny and legal issues. This resulted in the creation and popularity of massive new projects like the ChainLink platforms and gave rise to numerous smaller ones too. 

But, now this sector is undergoing somewhat of a slump which is especially reflective during the proceedings of last month itself. The sector has lost upwards of 50% in value for many tokens while still others have depreciated by more than 70% overall. But, the DeFi sector’s loss is Bitcoin’s gain as it has remained largely stable during this time and as a result, it has gained some of its market share that was lost during this time. If this sector will continue to decline in the coming days, it can be safely said that Bitcoin will keep going on the rise as investors will stay away from it and store their money in Bitcoin which is a much more stable asset. 

Other smaller indicators that show an incoming bullish trend on Bitcoin include increased attention from investment groups including a sizable investment from Square of the figure of $50 million. The overall hash rate or the amount of computing power dedicated to the network is also breaking all-time records easily and thus, causing the price to appreciate. 

Verdict

The indicators are extremely positive and may result in a healthy price increase in the near future. The $11,000 figure right now may easily be breached in the short-term and the index will move to the biggest hurdle of the year i.e. $12,000. If the price shoots past this amount with ease and the next hurdle at $13,500 we may see a challenge of the $20,000 soon and after that, the sky's the limit for the cryptocurrency. However these are long-term hurdles and it will be a challenge to overcome them in the immediate short-term. 

Bitcoin 

Image source: pixabay.com

New Bitcoin wallet addresses have reached a 2-year high, possibly fueled by a campaign by the Chinese government to start advocating for the cryptocurrency sector in a systematic campaign. These findings were disclosed by a market analyst by the name of Cole Gardner in a series of tweets on the popular microblogging platform Twitter.

Bitcoin addresses are like bank account numbers but instead of a bank-generated number attached to your ID card, Bitcoin addresses are large combinations of numbers and other characters that show what amount of Bitcoin is by whom. Now if the number of Bitcoin addresses increase over time, it largely means that the number of people owning the cryptocurrency are also increasing. This in turn means that the overall adoption and usage of the premier cryptocurrency are seeing a considerable uptick as well, thus contributing towards the growth of the crypto sector. 

New Addresses Increasing at Unprecedented Rate

Commenting on the increasing number of Bitcoin addresses, Garner showed that over 22,000 new addresses have been added to the network in one day alone in recent memory, which is much bigger than the average number of around 5,000-10,000 per day. He made these discoveries using a simple tool provided by analytics website Glassnode. 

This finding came out after analyst Willy Woo also highlighted a spike in activity in the generation of new Bitcoin wallets in the network. Woo also crucially pointed out that this activity wasn’t reflected on the actual price of the cryptocurrency and therefore, the future may witness some appreciation because of this factor as many of these new wallets will be looking to buy the cryptocurrency when the value is at intermediate level and nowhere near all-time high.

China Advertising Crypto Sector

A part of the reason why the sector is showing growth when it comes to new wallet addresses is the fact that the Chinese government which has historically been critical of public appraisal of the sector has now come out all in favour of the sector. 

Garner tweeted:

“Last week the Chinese government began a coordinated marketing campaign to focus Chinese retail investor psyche on crypto. Yes, this is really happening,”

Now the governments, especially the secretive ones like China’s usually don’t go in full public advertisement mode easily as many of them see it as a threat to the strength of the local currency. China is also locked in a trade war with the United States and this tussle between the largest and the second-largest economies of the world is expected to last some time. Both China and the USA would therefore be looking to keep their local currencies stable as the war plays out. China has historically banned cryptocurrencies officially but a considerable number of deals are happening via Bitcoin through Chinese traders as the government has looked the other way. It has also invested heavily in cryptocurrency mining facilities itself as well as incentivized big miners from around the world to invest in the country and take advantage of the cheap power prices produced from large government-run power producing units. It appears that China is looking at the cryptocurrency and blockchain sectors to give it a technical edge over the rest of the world as it increases its influence in the region and beyond. The new Chinese silk road project that connects more than 20 countries across Asia and even Europe is part of this expansion. 

Verdict

This considerable interest and investment into the crypto sector is already showing results and if the growth is sustained, we may be in for a price rally of the Bitcoin price index in the near future. It is therefore a good time to invest in the sector but one needs to be careful and only buy crypto from official exchanges only to avoid any possible online scams and counterfeiture. 

Jerome Powell 

For the past couple months, pessimistic prognoses regarding the economic situation not only in the US, but around the world as well, have been increasingly common. But it’s not often that someone with a direct influence on the world’s economy is honest enough to admit that the situation isn’t looking good - and recently Jerome Powell, Chairman of the Federal Reserve, has done exactly that.

The speech of Jerome Powell

In his recent speech at the annual meeting of the National Association for Business Economics, Powell has discussed in detail the global economic situation. He focused in particular on the long-term effects of the Covid-19 pandemic and the resulting lockdown policies introduced by governments around the world.

Although it's common knowledge that the Covid-19 pandemic is likely to cause not only a health crisis, but also an economic one, Jerome Powell highlighted the exact scale of the pandemic's impact on the federal budget of the United States. According to Powell, the situation of the American budget isn’t looking bright as “the U.S. federal budget is on an unsustainable path”.

Jerome Powell claims that the fight against Covid-19 is far from over, and much more funds will have to be spent until the pandemic is overcome. Although Powell considers the fact that $9 trillion from the federal budget has been funelled to private trading houses to be troubling, he believes that “now is not the time to give priority to those concerns”, as all focus should be paid to combating Covid-19 effectively.

As Jerome Powell admits that the forecasts regarding the economic situation in the United States aren’t good, it seems like Powell’s own Federal Reserve also isn’t without a blame. Fed is being criticized for helping Wall Street and big corporations instead of small and medium businesses.

Money from the CARES Act 

Recently, investigative journalists Pam and Russ Martens writing for Wall Street on Parade, have disclosed that the Federal Reserve sits on a huge amount of funds from the CARES Act. CARES -  the Coronavirus Aid, Relief, and Economic Security Act - has been the United States’ main response to the Covid-19 pandemic. However according to Pam and Russ Martens, the Federal Reserve hasn’t distributed all the funds from the CARES Act properly, and is still sitting on $340 billion of untapped CARES Act money.

The Bitcoin price 

Jerome Powell’s pessimistic opinion about the American economy certainly wasn’t the only one in the recent months, but it might be among the most important ones. The Covid-19 aftermath is almost certain to take its toll on the US economy, and as inflation is predicted to rise, the near future of the US Dollar doesn’t seem to look too bright. Many people are starting to look for safe haven assets able to protect their life’s savings from the crisis - and as the US Dollar loses value, the bitcoin price keeps rising.

Bitcoin technical analysis 

With a turbulent week in both crypto and traditional markets, it's necessary to get an up-to-date look at the markets at every opportunity that is presented. With that said, let’s take a look at the current state of Bitcoin and extrapolate out some future predictions for the short, medium, and long-term.

Short Term

By short term, we mean on a timeframe that uses candles that are 1 hour each. This should give us a look at the upcoming hours and next couple of days. Here we have the 1-hour Bitcoin chart.

BTC/USD short term chart

As you can see, we’ve been working for a few days at filling out this wedge/pennant. The thing about these patterns is that they often don’t lean one way or another. The best bet for the next couple of days and upcoming hours for Bitcoin would be that we continue to go sideways.

For the short-term, this is a neutral viewpoint. Though there’s nothing extreme here to predict, you can still use the pattern to your advantage based on which way it ends up breaking. If the pattern breaks up from this pennant, you can bet on a short-term trend to continue up. The same can be said of the opposite.

 At the present, we see nothing of particular note on this timeframe and expect some calm sideways movement.

Medium Term

For the medium term perspective, we’ll be looking at a chart with 4 hour handles. This chart should give us a good idea of what is to come in the next few days. Here is the chart we are looking at for the medium term.

BTC/USD medium term chart

This timeframe also displays the pennant pattern that we saw on the short-term timeframe. This view, once again, is a pretty neutral viewpoint. The fact that we haven’t recovered highs from the previous leg up and really haven’t even tried is somewhat discouraging.

However, we won’t know for sure until we break the pennant pattern that we are currently forming. With 4 touches on the bottom end of this triangle, one would think that the next move is a breakout of the pennant. However, we could just as easily bounce from the top again. With the MA line as support and the Stoch RSI near the bottom and ready to crossover, this view is overall bullish, but still filled with uncertainty.

Long Term

The long-term chart is one that is much more appealing. This chart will be looked at using 1-hour candles. With this view, we’ll get an idea of what we can expect in the coming days and weeks for Bitcoin price action.

BTC/USD long term chart

This chart gives us a much more clear picture of what is happening with Bitcoin over the long-term. We view this chart to be very bullish, albeit indicating a short-term drop down to previous levels of support.

As you can see, Bitcoin has recovered very nicely and performed well in the midst of global unrest and volatility and markets. We have consistently established higher lows, albeit resulting in somewhat neutral price action. The good news is that by no metric is Bitcoin overbought right now. We expect Bitcoin to continue its rise and continue setting higher lows.

Factors to Consider Moving Forward

As we move forward, it is going to be important to take note of current events. With so much going on in the world, markets including cryptocurrency and traditional markets are sure to be affected. Make sure you keep your pulse on the worldwide economy and be ready to adjust at a moment’s notice.

 

 

 

 

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