With the market cap nearing $190 billion and Bitcoin inching closer to $6,000, the feeling of caution is giving way to optimism.
Despite market correction and several isolated price pullbacks, the world’s largest cryptocurrency and the coin market remains largely bullish. According to Mati Greenspan, senior market analyst at eToro, this pullback, citing the recent “retracement,” is not “significant” if one were to look at the larger picture.
Quelling the uneasiness in the cryptocurrency community since the May 3 price pump, Greenspan pleaded with his audience to “zoom out” of the price chart to see the trend from January. He added that the recent surge confirmed that “we’re now in an upward channel.”
Further, the markets analyst added that despite any subsequent price pullback, even one as severe as a 12.39 percent drop shaving the price from the press time price of $5,934 to $5,200, the upward channel will still persist. Greenspan’s May 6 tweet stated,
“People are talking about today’s crypto retracement as if it’s significant. Zoom out guys and gals!!
Friday’s surge has confirmed that we’re now in an upward channel. Even if we go as low as $5,200 we’ll still be in an upward channel.”
According to the chart attached to the aforementioned tweet, the “upward channel began once the April 2 price rise of over 17 percent in a single day consolidated over the next few weeks.” Bitcoin managed to not only stay above $5,000, it soared higher in the next few days of the month.
Most notably, on April 23, Bitcoin recorded a Golden Cross when its 50-day moving average crossed its 200-day moving average. This was last seen in October 2015, when the coin was trading at under $300 and persisted till the 200-day crossed the 50-day in March 2018, when the coin was priced at $9,000. Several analysts, Greenspan included, stated that this was yet another sign of the ‘bull market.’
Since Bitcoin broke multiple resistances, as well as several psychological and historical support levels, the dominance of the king coin surged to a 7-month high. The top cryptocurrency accounted for just about half the market in March and now, that figure stands at 55.3 percent. The price performance coupled with the market dominance resulted in Greenspan stating that,
“The altseason has come to an end and bitcoin is the market driver once again.”
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Bitcoin’s on-chain/off-chain valuation indicators the key point of focus as coin heads to $13,000
With the rise in Bitcoin’s price, the rest of the cryptocurrency market has followed suit by displaying a green trend across the board. In a recent series of tweets by popular cryptocurrency analyst Adam Tache, users were informed about the top Bitcoin on-chain and off-chain valuation indicators, derived from on-chain valuation models.
The analysis touched on the Mayer Multiple created by dividing the price by the all-important – 200 day moving average. The current average Mayer Multiple stands at a figure of 1.39, which may climb higher. Looking at previous figures, the normal Mayer Multiple figures stated that if the value shoots up to 2.4, then Bitcoin eventually retraces back to a comfortable 1.5. The Mayer Multiple is usually considered as the original indicator used to clock the valuation of Bitcoin.
Another major indicator discussed in the thread was the NVT Ratio invented by Willy Woo, Partner at Adaptive Fund. The indicator is used to calculate Bitcoin’s prominence or value in the cryptocurrency space by evaluating the amount transacted on the blockchain as a “proxy for investment flow and bear and bull market cycles.”
At the moment, the NVT ratio for Bitcoin is in an abnormal region compared to the start of previous bullish patterns. The NVT ratio was above the “bear market” separator, which meant that the cryptocurrency was overbought. When Bitcoin is overbought, it usually means that the buying pressure is much higher than the selling pressure. Adam Tache opined,
“NVT signaling overbought is likely due to a number of factors — namely the proliferation of exchange-based, purely off-chain txs driving short-term price action.”
The analysis also pointed out the liveliness of the Bitcoin indicator created by Tamas Blummer. The indicator showed the inverse count of lost or ‘HODLed’ Bitcoin, while stating that when the ratio increases, long-terms holders of the cryptocurrency decrease their positions. The indicator conveyed accumulation of Bitcoin when the ratio decreased.
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