Bitcoin: As demand climbs to highest in years, what does it mean for prices
While its price struggles to rally above $26,000, new demand for Bitcoin has increased. However, a general correction in market sentiment may be required to initiate price growth.
- A record number of 717,331 new addresses were created on the Bitcoin network on 9 September.
- This suggested a renewed interest in the leading crypto asset.
A record number of new Bitcoin [BTC] addresses were created on 9 September, with 717,331 addresses being added to the coin’s network. This is the highest number of new addresses created in the past five years, crypto analyst Ali_Charts noted in a recent post on X (formerly Twitter). The previous record was set on 14 December, 2017 when 800,180 new addresses were created.
#Bitcoin | On September 9, a whopping 717,331 new $BTC addresses were created – the highest in 5 years!
Only once before, on December 14, 2017, did we see a larger surge with 800,180 new #BTC addresses. History in the making! pic.twitter.com/GLgymql9vL
— Ali Charts (@alicharts) September 10, 2023
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A surge in new demand for an asset is often a precursor to a price rally, suggesting renewed interest in that asset. However, with BTC’s price facing significant resistance at $26,000 and weighted sentiment now stationed in the negative territory, the possibility of a price uptick in the meantime remains minimal.
Buyers and sellers await first mover
At press time, the leading coin exchanged hands at $25,862. With price consolidating in a tight range in the past few weeks, readings from BTC’s Bollinger Bands (BB) indicator observed on a daily chart revealed that volatility in price has reduced.
August was predominantly marked with price swings, primarily due to the deleveraging event of 17 August. As the market moves on from the aftermath of the liquidity flush and spot traders stay their hands from executing major trades, the gap between the upper and lower bands of BTC’s BB has narrowed. The narrowing of the BB bands suggests that the volatility of BTC has decreased.
Further, the position of BTC’s key momentum indicators showed that while accumulation dawdled, there have not been any significant sell-offs from spot traders. Although daily distribution has outpaced accumulation, the volumes have not been high enough to initiate a downward price swing.
The coin’s Relative Strength Index (RSI) and Money Flow Index (MFI) have flattened for most of the month. At press time, the RSI was 46.76, while the MFI was 39.61.
Despite this, BTC’s Directional Movement Index (DMI) showed that sellers controlled market activity amongst daily traders. This indicator measures the strength and direction of a price movement.
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At press time, the Positive Directional Indicator (green) at 17.97 was positioned below the Negative Directional Indicator (red). This showed that BTC sellers’ strength outweighed its buyers.
However, the Average Directional Index (ADX) position offered some respite. At 21.98 as of this writing, the downtrend was weak. And a change in market sentiment could put the bulls back in control.
