Bitcoin has increased as much as 35% over the past seven days with Bitcoin dominance surpassing 45% for the first time in two months. Read more to understand the market situation right now.
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Every other week, IntoTheBlock brings you an on-chain analysis of top news stories in the crypto space. Leveraging blockchain’s public nature, IntoTheBlock’s machine learning algorithms extract key data that provide a deeper dive into the major developments in the industry.
Strong Buying Activity Propels Bitcoin Above $55k
Crypto markets have bounced back strongly, with Bitcoin, in particular, leading the way. Bitcoin has increased as much as 35% over the past seven days with Bitcoin dominance surpassing 45% for the first time in two months. The recent price run-up has been fueled by strong buying activity and positive trends in terms of expectations and on-chain data.
In regards to news, many pointed to Brazil exploring legalizing Bitcoin as a method of payment. Brazil’s federal deputy Aureo Riveiro will be presenting a bill to the Chamber of Deputies this week, looking to follow the footsteps of El Salvador. While this is not yet confirmed, the proposal brought optimism into a market that was already pointing higher.
Similarly, there is a lot of expectation developing around a Bitcoin ETF potentially being approved as early as this month. Although a decision on physically-backed Bitcoin ETFs was recently postponed, upcoming futures-backed ones appear to be better suited. Eric Balchunas, Senior ETF Analyst at Bloomberg gives it a 75% chance that one of the four upcoming futures-backed ETFs gets approved.
Source:Twitter
While it is uncertain how much these developments are contributing to Bitcoin’s price action, the strong buying activity is undeniable. This is apparent both in the order book and on-chain indicators.
As many will know, each trade on an order book has a market maker and a taker. Takers are the ones making market orders by buying at the ask or selling at the bid. High volume from takers in either direction tends to shift prices strongly as they take on the liquidity of the order book, pushing prices higher or lower.
IntoTheBlock’s Trades per Side indicator displays the volume being transacted by takers, displaying buy volume as positive numbers and sell orders as negative. Throughout Wednesday morning (EST) it became evident that there was strong buying action taking place, particularly in Binance.
As of October 6 using IntoTheBlock’s Bitcoin order book indicators
Within a minute over 600 BTC was acquired by takers in Binance in two separate instances, highlighting the bullish conviction behind the recent price action. Diving into on-chain activity we also observe strong buying with the number of addresses holding one or more Bitcoin continuously growing throughout the past few months.
As of October 6 using IntoTheBlock’s upcoming ownership v2 indicators
After dropping significantly in Q2 2021, the number of addresses holding 1 or more Bitcoin has steadily climbed. This signals an accumulation from holders looking to reach 1 BTC and highlights their conviction in the recent surge in price as this number has kept increasing.
Given the increasing momentum behind Bitcoin, it is worth taking a look at the next levels that are expected to act as support and resistance. Based on IntoTheBlock’s In/Out of the Money Around Price we can determine price levels around which buying activity has been previously concentrated. Using this, we can anticipate resistance from sellers around the $58,000 price range.
As of October 6 using IntoTheBlock’s Bitcoin financial indicators
790,000 addresses previously acquired nearly 300k BTC just around $58,000, which makes this the largest cluster of buying activity above the current price. Previous buyers may look to break-even on their positions around this range. Beyond this price level, however, there is little to no resistance expected to prevent new all-time highs.
Conversely, if prices were to fall significantly, strong support is expected above $50,000, where 670,000 addresses bought 416k BTC. There is also some buying activity around $54,000 which could act as a significant level for buyers eager to accumulate.
Overall, sentiment for Bitcoin has turned positive by many metrics. Strong buying activity is witnessed both in market data and on-chain analytics. Moreover, Bitcoin’s correlation with traditional markets has dropped to near-zero, making it less prone to the recent weakness in stock markets. However, the strong anticipation for both the approval of a Bitcoin ETF in the US and a Brazilian “Bitcoin standard” could act as a roadblock if they don’t go through. Ultimately, though, consensus remains bullish for Bitcoin over the short term.
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