Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

Bitcoin (BTC) Bounce Was Predicted, Here's What This Indicator Says Next

Published 05/06/2024, 08:49 AM
Updated 05/06/2024, 12:00 PM
© Reuters.  Bitcoin (BTC) Bounce Was Predicted, Here's What This Indicator Says Next
BTC/USD
-

U.Today - The recent bounce in Bitcoin's price from around $60,000 on May 1 to $65,000 by May 6 did not come as a surprise for those who are familiar with the Bitcoin Fundamental Index (BFI) provided by Swissblock. This innovative tool predicted the rise accurately, signaling a reversal.

The BFI, which correlates fundamental Bitcoin network metrics with price movements, identified an exhaustion of sellers and an increase in network growth just before the rally. This suggested that the downside risk was limited and that a bounce was on the horizon. Specifically, the BFI had fallen to levels that historically corresponded with the market's bottom, making it an ideal time for investors to consider entering the market.

On-chain data from the period shows a significant increase in transactions over $100,000, and a steady inflow and outflow on exchanges, indicating a relatively balanced market sentiment. The total inflow to exchanges was around $8.3 billion, with outflows slightly lower at $7.23 billion, suggesting that while some investors took profits, there was substantial buying pressure to sustain the rally.

Ahead of the Federal Open Market Committee (FOMC) meeting, liquidity expectations were set to be reaffirmed, contributing to positive sentiment on the cryptocurrency markets. This anticipation played a key role in driving the price upward as investors positioned themselves for potential favorable policies.

The BFI also showed that the concentration by large holders was relatively low at 11%, indicating that the recent price movement was not primarily driven by the activities of whales, which can often lead to increased volatility. Additionally, the price correlation with Bitcoin remained stable at a score of 1.

This article was originally published on U.Today

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.