Key On-Chain Metric Shows a Strong Bitcoin Bull Rally is Brewing
Bitcoin investors haven’t done too well over the past two months. Despite the near 100% recovery from the $3,700 lows seen on March 12th, the cryptocurrency remains more than 30% below the 2020 highs near $10,500.
Fortunately, multiple sets of data and other signs indicate that a full-blown Bitcoin bull run is on the verge of taking place.
Bitcoin Bull Rally Is Brewing
As observed by Josh Olszewicz — a crypto analyst at Brave New Coin — the number of weekly active addresses on the Bitcoin network recently breached a nine-month high, surmounting levels seen all throughout the late-2019 and early-2020 bear market.
This is important as previous upticks in this key metric coincided with the start of bull runs, with the metric rallying higher in early-2017, and exploding higher at the start of 2019.
$BTC weekly active addresses at 9-month highs
h/t @coinmetrics pic.twitter.com/jRtLCvWDDv
— Josh Olszewicz (@CarpeNoctom) April 19, 2020
This comes shortly after Glassnode, a blockchain analytics upstart, observed on April 15th that there’s been a strong increase in the number for “daily new entities on the Bitcoin network.”
The metric’s seven-day moving average, which calculates the number of new users entering the BTC network, has risen from the 6,000 lows in mid-March to 17,000 just recently, an increase of nearly 200% in just a few weeks’ time.
Like with the active address metric, spikes in the daily new entities count preceded historical rallies in the Bitcoin price.
Money is Flooding Into the Crypto Space Too
Bitcoin’s strength may be supported by more than just an increase in users, but also by an increase in capital in the crypto space as well.
Per previous reports from Bitcoinist, data from crypto analytics tracker Skew.com indicated that the amount of USDT in circulation recently passed seven billion, or approximately 3.4% of the entire crypto market’s market capitalization per CoinMarketCap. This comes after a series of $120 million prints, the latest of which took place on April 18th and the day before that.
This should support Bitcoin’s price because it has been found that there is a rough but still present correlation between the capitalization of USDT and the overall trend of the crypto market, as observed by digital asset manager Charles Edwards.
Major changes in Tether’s Market Cap have led Bitcoin’s price over the last 1.5 years.
5 January 2020 was no different.
A healthy signal.
Keep it printing 🖨️ pic.twitter.com/dfe0dBJzwh
— Charles Edwards (@caprioleio) January 13, 2020
Prior to the nearly 50 percent crash in November 2018 that saw Bitcoin plunge from $6,000 to $3,150, the amount of USDT circulating fell by hundreds of millions; also, prior to the majority of 2019’s crypto rally was the printing of hundreds of millions worth of USDT.
Fundamentally, this adds up. As elaborated further upon by Ryan Selkis, CEO of crypto data and market analysis site Messari, the fact that there is a growing amount of stablecoins, namely stablecoins on exchanges, is a good sign that there is “dry powder” on the crypto sidelines ready to be pushed into Bitcoin when the time is right.
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