The crypto-winter brought the digital assets under tremendous pressure, with major coins losing most of their value. The bull run led by Bitcoin [BTC], recovered the altcoins’ market significantly. Many prominent analysts in the field have attributed the latest series of the bullish waves to institutional entries. However, according to Kraken’s Austin Alexander, there has been an inflow of “professional traders” into the crypto-world.
The Vice-President of the crypto-exchange asserted that there was an increase in “activity” and infusion of traders in the crypto space. A lot more “responsible kind of professional traders” have made a foray into the scene, infusing “legitimate money” with the space over the last six years even if it was “not from institutional traders”.
Speaking at the Magical Crypto Conference, 2019, trading panel, Austin Alexander said that the cryptocurrency exchanges were growing even as the pace was “milder” than the previous bull wave. Recalling the mass exodus of users during the period of December 2017 and January 2018, Alexander stated that there were probably no exchanges which had reached those number of users again. He, however, maintained that,
“.. but it’s coming and now we’re still growing. I think all the major exchanges are still growing. It’s not 50,000 sign ups a day any longer, but it’s still growing.”
When asked if there was a push towards focussing on institutional adoption versus retail, Kraken’s VP responded in the affirmative and said that there was infinite “slave money”, but there existed only 21 million Bitcoins. He said,
“.. in exchange, you know everybody should realize, do you want to be successful, you got to be on the supply side, first the slave money will come it’s my opinion.”
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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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