Key Points
- Bitcoin’s price has increased by nearly 5% since the last weekend, with on-chain metrics indicating a buy signal.
- However, concerns over “artificial demand” and an overvalued Network Value to Transactions Ratio could potentially hinder the bullish trend.
Bitcoin’s price has seen a near 5% rise since the previous weekend. The increase has been attributed to a buy signal from on-chain metrics, despite concerns about potential “artificial demand”.
Since Saturday, 29th June, Bitcoin has gained 4.5% in value. The support zone, which dates back to 1st March, was retested and held up as support. Furthermore, the past three months’ price action range lows were also preserved.
Technical Indicators and Market Sentiment
At the time of writing, the $63.3k mid-range mark was acting as resistance. The technical indicators did not yet show a bullish reversal on the higher timeframes. However, the bearish sentiment from the past week and an uneven futures market suggested that liquidation levels to the north may be targeted.
The reasons behind Bitcoin’s price surge are multifaceted. The metrics indicate a network-wide accumulation but also hint at potential issues.
The 30-day MVRV ratio was negative, implying that short-term holders were not making profits. However, the mean coin age has been steadily increasing over the past six weeks, a positive sign. This indicates accumulation among holders and suggests that the asset is undervalued, signaling a short-term buying opportunity.
Potential Obstacles for Bitcoin
However, the Network Value to Transactions Ratio, based on circulation, indicated that Bitcoin was overvalued compared to the volume of BTC transacted on-chain daily. This could pose a challenge to the bulls, but the negative impact could be offset by the MVRV and mean coin age combination.
The bulls managed to prevent the price from dropping below the $60k psychological support, thus the $55k liquidation cluster was not tested. If the price continues to rise, the $73k zone could be the next area of interest for traders.
Julio Moreno, Head of Research at CryptoQuant, suggested in a tweet that Bitcoin miner capitulation was imminent and that prices might have reached a local bottom. Another crypto analyst, Axel Adler, noted that it was primarily the crypto exchanges buying up the Bitcoin sold in recent weeks, not the broader market.
While this is not necessarily a negative development, Adler expressed concern that other holder groups were selling, and this artificial demand might not be sustainable in the long term.
