Bitcoin is witnessing the development of a troubling divergence, which poses several questions about the sustainability of the cryptocurrency’s growth. Here’s the most important one so far — how does it affect price?
Network Activity On Decline As Price Rises
In a Quicktake post on the CryptoQuant platform, crypto pundit CryptoOnchain highlighted a growing negative divergence between Bitcoin’s price and the number of active addresses within the cryptocurrency’s network.
The analyst’s report depended on the Bitcoin Active Addresses metric, which, as is apparent, tracks the number of unique wallet addresses participating in transactions on the network within a given period. The value of this metric reflects the amount of user activity or engagement of the crypto network.
From the chart shared by CryptoOnchain, there is “a clear negative divergence between Bitcoin’s price and the 14-day moving average of active addresses.” What this means is that the broader Bitcoin bull rally is happening against a backdrop of reduced network activity and user engagement.
The on-chain analyst further explained that such divergence typically functions as an early warning or signal that the bullish momentum might be losing its strength. As the cryptocurrency thus loses its bullish momentum, the risk of the BTC price undergoing correctional activity may simultaneously increase.
Aside from the risk of correction, there is also the possibility of the Bitcoin network activity falling even further. When this happens, demand for BTC could further weaken, which could temporarily translate to increased selling pressure.
BTC Buyers On Binance Losing Against The Sellers
In another post on CryptoQuant, online pundit Arab Chain published data from Binance showing that the net Buy-Side Pressure vs Bitcoin Price remained negative for most of the day. This means that more sell transactions have been executed compared to the buys on Binance over the past 24 hours.
The crypto expert also explained that attempts by buyers to push Bitcoin’s price above $113,000 fell short, as Buy-Side Pressure on the world’s largest exchange by trading volume continued to lag within the negative territory.
On the positive side of the market outlook, Arab Chain noted that “a clear and sustained positive turn” in the Buy-Side Pressure, with a close above $113,000, is critical for the market’s picture to become a little more optimistic. As of press time, Bitcoin is valued at about $109,610, reflecting no significant movement in the past 24 hours.
from Bitcoinist.com https://ift.tt/GJc4Pgp
Comments
Post a Comment