This is a “heavy dollar” catalyst for Bitcoin’s growth, even though investors are taking profits
With Bitcoin down nearly 7% over the past week, ongoing bearish sentiment is ubiquitous in the crypto space. However, that’s not the worst news, there is worse news.
Investors take profits
On-chain indicators over the past week show increased profit-taking and the resurgence of long-term owners who seem to believe in slumped sales. While signs of recovery from activity in the chain are difficult to see, several indicators point to imminent price movements from a historical perspective.
BTC price (blue) vs. stock market entry (pink) | Source: Santiment
According to the graphic above, the volume of BTC that was moved into defined exchange wallets increased over the weekend. This can be a sign that the owners’ psychology is weakening, leading to increased selling pressure. Accordingly, the total supply of BTC available on the exchanges rose by 0.14% on July 17th. It’s worth noting that BTC has fallen below $ 30,000 at the time of writing
More importantly, it affects Net Income / Loss (NPL) – this is the difference between the cost during the BTC acquisition and the selling price. The index hit a 4-month high over the weekend, while previously largely in negative territory since BTC corrected in May.
This is an indication that the coins that move around the network during this time have been sold at a significant profit.
BTC price (blue) vs. used age (pink) | Source: Santiment
Eventually, as the graph shows, the age of BTC consumption reached its largest increase in 6 months. This implies that the coins transferred on Saturday had been inactive for a long time, supposedly over 3 to 5 years.
While these metrics may not have a significant impact on the crypto king’s price movement, it is an indication of the growing uncertainty among investors due to the longer period of range trading, along with fears of further correction by holders.
It is also important to note that social indicators can be a result of this sell-off or just a manifestation of the prevailing market sentiment. According to Santiment, the relative social dominance of BTC (RSD – compare BTC mentions on social media with altcoins) also decreased during this time. It fell from 80.5% in June to 55.5% last week, suggesting that top altcoins like ETH and ADA are gaining attention as investors get apathetic to BTC.
This is also evident in the average sentiment of thousands of Bitcoin-related messages found on crypto media showing bearish sentiment over the past month. Even the mentions of “bears” and “bears” are increasing, which further suggests a very frightening environment.
However, despite recent corrections, this does not necessarily indicate negative future price movement, as the high social volume in the past has not been directly correlated with bullish movements either. Conversely, increased mentions often coincide with price corrections as investors tend to go overboard near market tops, as in. mentioned report by Santiment.
Bitcoin social psychology | Source: Santiment
Similarly, the retrograde atmosphere clearly helped the past bull run. In fact, many of BTC’s rallies over the past 2 years have emerged from largely bearish environments where investor sentiment has really fallen.
Bitcoin’s growth catalyst
The relationship between traditional stocks, commodities, and Bitcoin has been a fundamental factor in the past. For example, the March 2020 crash came when the stock market experienced its biggest slump in over 30 years and Bitcoin investors rushed to cash out liquidity.
Bitcoin-Gold-Real Correlation | Source: Skew
However, over time the correlation decreases. But it’s still showing a big trend on the charts. At the time of writing, the real bitcoin-gold correlation has dropped significantly, especially as BTC price has plummeted in recent weeks. A similar trend can be seen in the S&P 500 as both gold and SPX maintain an uptrend.
However, the main correlation that we will discuss in this article is between the returns on Bitcoin and US 30-year bonds.
BTC / USD | Source: TradingView
Unlike most other correlations, the similarities between the movement of BTC and US 30-year bond yields are eerie. It’s certainly not the exact same move, but both assets have moved in the same direction over the past few months.
Why is the yield on a 30 year US bond important? Because they are great metrics for analyzing future market conditions. Now there are many variables at play, but we’ll see how the Federal Reserve (Fed) connects these aspects.
The Fed has been printing a “bluff” of the US dollar for a year. After the Fed meeting last month, the agency also hinted at short-term rate hikes. In addition, while the Fed is giving the banks some extra money, it is increasing the 1-year US yields in the short term. But what happened to the 30-year bond?
30 year bond yield | Source: Twitter
It can be concluded that inflation is bound to persist, and given the need for the Fed to raise rates, it will only slow economic growth now.
In fact, the 30-year bond yield is currently falling. As the yields on 30-year bonds tend to rise, the economy can be expected to grow with it.
In the case of Bitcoin, a growing economy would be beneficial to their goal, as Bitcoin tends to do better with the development of the overall market.
The catalyst for future growth is therefore: once the yields on 30-year bonds recover, the positive feedback loop will reflexively lead to better prospects for Bitcoin. In other words, a rising price will put more trust in the crypto king.
You can see the BTC price here.
Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
Minh Anh
According to AZCoin News
Follow the Youtube Channel | Subscribe to telegram channel | Follow the Facebook page
Author
Bitcoin
This is a “heavy dollar” catalyst for Bitcoin’s growth, even though investors are taking profits
With Bitcoin down nearly 7% over the past week, ongoing bearish sentiment is ubiquitous in the crypto space. However, that’s not the worst news, there is worse news.
Investors take profits
On-chain indicators over the past week show increased profit-taking and the resurgence of long-term owners who seem to believe in slumped sales. While signs of recovery from activity in the chain are difficult to see, several indicators point to imminent price movements from a historical perspective.
BTC price (blue) vs. stock market entry (pink) | Source: Santiment
According to the graphic above, the volume of BTC that was moved into defined exchange wallets increased over the weekend. This can be a sign that the owners’ psychology is weakening, leading to increased selling pressure. Accordingly, the total supply of BTC available on the exchanges rose by 0.14% on July 17th. It’s worth noting that BTC has fallen below $ 30,000 at the time of writing
More importantly, it affects Net Income / Loss (NPL) – this is the difference between the cost during the BTC acquisition and the selling price. The index hit a 4-month high over the weekend, while previously largely in negative territory since BTC corrected in May.
This is an indication that the coins that move around the network during this time have been sold at a significant profit.
BTC price (blue) vs. used age (pink) | Source: Santiment
Eventually, as the graph shows, the age of BTC consumption reached its largest increase in 6 months. This implies that the coins transferred on Saturday had been inactive for a long time, supposedly over 3 to 5 years.
While these metrics may not have a significant impact on the crypto king’s price movement, it is an indication of the growing uncertainty among investors due to the longer period of range trading, along with fears of further correction by holders.
It is also important to note that social indicators can be a result of this sell-off or just a manifestation of the prevailing market sentiment. According to Santiment, the relative social dominance of BTC (RSD – compare BTC mentions on social media with altcoins) also decreased during this time. It fell from 80.5% in June to 55.5% last week, suggesting that top altcoins like ETH and ADA are gaining attention as investors get apathetic to BTC.
This is also evident in the average sentiment of thousands of Bitcoin-related messages found on crypto media showing bearish sentiment over the past month. Even the mentions of “bears” and “bears” are increasing, which further suggests a very frightening environment.
However, despite recent corrections, this does not necessarily indicate negative future price movement, as the high social volume in the past has not been directly correlated with bullish movements either. Conversely, increased mentions often coincide with price corrections as investors tend to go overboard near market tops, as in. mentioned report by Santiment.
Bitcoin social psychology | Source: Santiment
Similarly, the retrograde atmosphere clearly helped the past bull run. In fact, many of BTC’s rallies over the past 2 years have emerged from largely bearish environments where investor sentiment has really fallen.
Bitcoin’s growth catalyst
The relationship between traditional stocks, commodities, and Bitcoin has been a fundamental factor in the past. For example, the March 2020 crash came when the stock market experienced its biggest slump in over 30 years and Bitcoin investors rushed to cash out liquidity.
Bitcoin-Gold-Real Correlation | Source: Skew
However, over time the correlation decreases. But it’s still showing a big trend on the charts. At the time of writing, the real bitcoin-gold correlation has dropped significantly, especially as BTC price has plummeted in recent weeks. A similar trend can be seen in the S&P 500 as both gold and SPX maintain an uptrend.
However, the main correlation that we will discuss in this article is between the returns on Bitcoin and US 30-year bonds.
BTC / USD | Source: TradingView
Unlike most other correlations, the similarities between the movement of BTC and US 30-year bond yields are eerie. It’s certainly not the exact same move, but both assets have moved in the same direction over the past few months.
Why is the yield on a 30 year US bond important? Because they are great metrics for analyzing future market conditions. Now there are many variables at play, but we’ll see how the Federal Reserve (Fed) connects these aspects.
The Fed has been printing a “bluff” of the US dollar for a year. After the Fed meeting last month, the agency also hinted at short-term rate hikes. In addition, while the Fed is giving the banks some extra money, it is increasing the 1-year US yields in the short term. But what happened to the 30-year bond?
30 year bond yield | Source: Twitter
It can be concluded that inflation is bound to persist, and given the need for the Fed to raise rates, it will only slow economic growth now.
In fact, the 30-year bond yield is currently falling. As the yields on 30-year bonds tend to rise, the economy can be expected to grow with it.
In the case of Bitcoin, a growing economy would be beneficial to their goal, as Bitcoin tends to do better with the development of the overall market.
The catalyst for future growth is therefore: once the yields on 30-year bonds recover, the positive feedback loop will reflexively lead to better prospects for Bitcoin. In other words, a rising price will put more trust in the crypto king.
You can see the BTC price here.
Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
Minh Anh
According to AZCoin News
Follow the Youtube Channel | Subscribe to telegram channel | Follow the Facebook page
