4 Reasons to Be Bullish as Bitcoin Breaks Back Above $40K

Although bitcoin has already added $10,000 of value in a week to $40,000, some on-chain features suggest even more bullish developments awaiting right around the corner. From the Stablecoin Ratio to increasing active addresses to corporations buying and holders still holding.

Reason 1: Bitcoin to Stablecoin Ratio

According to data from CryptoQuant, the Bitcoin to stablecoin ratio oscillator has gone into bullish territory. This metric highlights the ratio of the number of bitcoins to stablecoins stored on all exchanges.

The analytics company said this metric has a “perfect BTFD hit rate since 2019.” CryptoQuant encouraged BTC bulls by adding, “it just printed another buy signal,” as the stablecoins sitting on exchanges have far superseded the bitcoins, suggesting more potential purchases.

Bitcoin to Stablecoin Ratio Oscillator. Source: CryptoQuant
Bitcoin to Stablecoin Ratio Oscillator. Source: CryptoQuant

It’s worth noting that the Bitcoin Stablecoin Supply Ratio, which works similarly, has also been declining in the past few months.

Reason 2: The Bottom Is In?

Jurrien Timmer, the Director of Global Macro at Fidelity Investments, also opined about BTC’s recent price developments. In fact, he believes the massive price slump towards $30,000 was actually the bottom.

He came to this conclusion by comparing the BTC/USD chart with the GS Retail Favorites Basket. History shows that the correlation between the two has been relatively high, suggesting that bitcoin could indeed mimic the basket’s performance.

Bitcoin Price Compared to GS Retail. Source: Twitter
Bitcoin Price Compared to GS Retail. Source: Twitter

Reason 3: Corporations Keep Buying, Institutional Praise

While some reports suggested that short-term investors had sold off their BTC holdings during the recent crash, others have only doubled down. Such is the case with MicroStrategy.

Michael Saylor’s NASDAQ-listed business intelligence giant plans to allocate another $1 billion in the primary cryptocurrency after a new stock offering.

The executive, who became among the most prominent BTC bulls in the past year, took it to Twitter to advise those who plan to have 5% of their portfolios in the asset that the remaining 95% will be “demonetized by bitcoin.”

Interestingly, he was referring to Paul Tudor Jones III. The prominent hedge fund manager, who outlined BTC’s benefits over a year ago after the COVID-19 pandemic broke out, praised the cryptocurrency once again during a more recent interview.

He compared it with math, which has been here for thousands of years and will be here for thousands more. Consequently, Jones wanted to increase his BTC holdings to represent 5% of his portfolio. Such compliments coming from one of the most successful investors of this generation could indeed be viewed as a bullish signal.

Reason 4: Hodlers Keep on Hodling

In its weekly review on the market, Glassnode touched upon the role of so-called HODLers – investors who have purchased their assets before a specific date and refuse to sell or even trade them.

In this case, the analytics firm looked at long-term holders who “include all buyers of coins prior to January 10th, 2021.”

Glassnode’s chart below shows that “a very large volume of coins were purchased in the early bull market, and have remained largely unspent. The current rate of maturation is over 400k BTC/month, which is much larger than the 160K BTC we estimated were sold, mostly by short-term holders, during the May capitulation event.”

Bitcoin Long-Term Holders' Behavior. Source: Glassnode
Bitcoin Long-Term Holders’ Behavior. Source: Glassnode

And, perhaps a bonus reason is the active addresses on the Bitcoin network. This activity is typically linked with BTC’s price, with the general rule of thumb suggesting the more users utilizing the blockchain, the more bullish performance transpires.

The active addresses have bounced off from the early June low of 715,000 such wallets to just shy of one million. It’s still well below the mid-April high of 1.4 million (interestingly, BTC went towards its latest ATH at that point), but the ten-day increase could still be considered bullish.

 

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