Both leading cryptocurrencies have seen an increase in bullish sentiment due to on-chain activity and macro-environments. Apart from Square and Stone Ridge Asset Management, we continue to see new players experiment with digital assets as an alternative investment that will move against inflation.
Bitcoin has been trading around $11,535, gaining 1.5% over the previous 24 hours. The day’s range was $11,249-$11,543, making Thursday the 3rd day of consolidation. The bullish indicators are its 10- and 50-day moving averages as bitcoin’s price stayed above them.
Bitcoin trading on Bitstamp since Oct. 13 Source: TradingView
Bitcoin is struggling to get past the $11.5k resistance after its pull back from $11.7k. If bitcoin wants to stay on the right side of things, it must turn its resistance into its new support.
Some analysts say that bitcoin has the support needed to climb all the way to $15k if historic trends repeat themselves this year. MVRV is a metric devised by analysts Murad Mahmudov and David Puell. It uses the market cap versus realized cap and designed to provide a more accurate valuation of bitcoin than traditional market cap. The current MVRV ratio is at 1.8, and it’s supported by the trendline where bitcoin bottomed back in late 2018. With a continued steady growth, we’ll be seeing a similar trajectory as we did back in the 2017 bull run. We hope to break 2, and then retest 2.5, which would put bitcoin above $15k.
Bitcoin MVRV ratio highlighting uptrend. Source: Stack Funds/ CoinMetrics
As for Ethereum’s activity, the number of unique daily addresses has rebounded from its low levels near the end of the summer. The latest surge has taken Ethereum to a 3-week high of 420k addresses per day, marking a 25.2% growth.
Another key metric is the 365-day dormant circulation. This tracks the renewed movement of all tokens that have previously not changed addresses for more than a year. Since October 7th, the number stayed low, a daily average of 13,428ETH. This tells us that long-term holders are still hodling even after the recent price bounceback.
As investors prepare for a much anticipated stimulus package, they being to build positions in assets that move with inflation. When it comes time to measuring “lifeboats,” bitcoin will be the best performing asset. Bitcoin (57%), after all, is outperforming gold (26%) and silver (35%) for the year.
Bitcoin versus precious metals in 2020. Source: CoinDesk Research
As far as diversifying, it’s no surprise that institutions are taking a risk with crypto since the alternative is a definite loss. In the 3rd quarter, Grayscale Bitcoin Trust saw an inflow of $1.05 billion, marking its first billion-dollar quarter. Institutional investment continues to break records and some investors are afraid of a bitcoin shortage. Asset manager and 10T Holdings co-founder Dan Tapiero believes that if high-profile investments continue to make headlines, bitcoin’s limited supply will be unable to satisfy large demand.
Ironically, after March 13th, one of the steepest falls in bitcoin’s recent history, institutional demand surged rapidly. Tapiero commented, “Grayscale Trust is eating up BTC like there is no tomorrow. If 77% of all newly mined turns into 110%, it’s lights out. Non-miner supply will get held off-market in squeeze. Shorts will be dead. Price can go to any number.”