Bitcoin's continued sideways trading has given little insight into the medium-term outlook.
New data now shows that Bitcoin's price development over 2020 was driven by a significantly limited number of market participants, which may explain why crypto has been between $ 9,000 and $ 10,000 for over six weeks.
According to an analysis company, in 2020 only 27% of BTC's circulating supply moved. This means that the remaining 73% have remained inactive and active traders are using margins, futures and options, which is likely to be the cause of the overall volatility.
This comes from data showing that the basic state of the benchmark cryptocurrency is gradually increasing and may be opening the gates for further upward movements in the coming weeks and months.
Bitcoin's underlying health grows when bullish signs flash on and off chain data
The multi-week consolidation of Bitcoin has affected investor sentiment and prompted many to predict that the cryptocurrency will soon collapse and trigger a new downward trend.
There are factors that support this notion, including the triple top currently in play at $ 10,500, consecutive declines at $ 10,000, and the lower highs he found.
There is an indicator that indicates that Bitcoin has growing fundamental health during this consolidation phase, suggesting that its next move could benefit buyers.
Glassnode's compass – an indicator of the research company – shows that crypto has slowly migrated to the bull area in recent months.
“For the fifth time in a row, the compass is in regime 1 and represents a bullish state for the market and for chain activities. The price development of ESD and Bitcoin declined slightly compared to the previous week, but remains firmly in the green zone, ”they explained, pointing to the chart below.
They further explain that Bitcoin's stable position within the green zone is a good sign of the medium-term outlook.
"This continued stability both in and out of the chain is a good sign for BTC … While this optimistic mood will not necessarily lead to immediate price gains for BTC, the long-term outlook is optimistic."
BTC price promotion is driven by a small group of market participants
According to other information from Glass knotIn 2020, only 27% of Bitcoin's circulation offering was shifted. The rest have remained inactive.
This means that the market is currently driven by a small percentage of market participants, as only a fraction of this 27% is likely to be moved due to active trading.
Rafael Schiltze-Kraft – Glassnode's CTO – spoke about this in a recent tweet. saying::
"Only 27% of the circulating # Bitcoin offer moved in 2020. Right, 73% of all existing bitcoins (~ 13.5 million BTC) have been inactive since 2019 and earlier."
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