Explaining the Current Bitcoin Rally Using Blockchain Data

Bitcoin and the top altcoins are experiencing a major rally with prices and trading volume increasing to significant levels. In the case of Bitcoin, the top cryptocurrency has been hovering around the $12,000.00 mark for the last 24 hours.

The speculation about the price movements has been rooted around macro-economic factors such as the escalations in the trade war between the United States and China and its impact in major economic indices. However, can we look deeper beyond that macro-economic perspective? An analysis of the blockchain data can reveal some fascinating patterns of the recent crypto-rally.

The Macro-Perspective

The week started with a major but steady rally in the price of Bitcoin that also reflected on other major cryptos.

Major economic indices the United States saw major drops with the Dow Industrial Average dropping almost 800 points.

Volatility also increased across the board and major world indices were impacted.

Energy stocks got killed but gold did pretty well.

Obviously the big news of the day was China weaponizing its economy by devaluing its currency.

Putting together all those factors we can theorize about different explanations about the price movements in Bitcoin and other cryptos. However, how did the movement was really reflected in the sentiment and positions of investors.

What Blockchain Indicators Tells Us About the Bitcoin Price Rally

Exploring blockchain datasets reveal some fascinating patterns about the recent Bitcoin price rally. Let’s take a look.

The increase in price brought together an increase in the percentage of investors realizing profits with Bitcoin.  In-Out the Money analysis reveals that, at the moment, almost 90% of the Bitcoin investor based is “in the money” as shown in the following chart. Even more interesting is the fact that there are around one million addresses with positions around the current price which will help influence the trading activity in the next few days.

The Break-Even analysis that looks at realized gains shows that the next strong level of resistance of Bitcoin might be around $10.400 dollars so there is some room for the price to fluctuate.

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We also saw an increment on the number of large transactions/transfers as the following analysis shows:

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Surprisingly enough, the Bitcoin network is not growing that fast with more addresses going to zero balance as new addresses being added. However, there is a growing number of active addresses which is a sign of robustness of the network.

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With all the turmoil around the Chinese Yuan, there have been some speculation that it will translate into investments in Bitcoin. However,  East vs. West Analysis reveals that almost 54% of the Bitcoin on-chain transactions took place in the west while Asia accounted for 46% of the activity.

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New investors are always a relevant indicator of price movements. In the case of Bitcoin, there have been a steady increment on the number of new investors as shown in  Traders analysis. It is particularly interesting to see the large number of new investors accumulated prior to the price rally.

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As you can see, the current price rally is leaving tangible footprints in the Bitcoin blockchain that can be used to better understand its key characteristics. Certainly, the analysis of blockchain datasets reveals a different perspective beyond simple price and volume indicators.