Bitcoin is expected to see double-digit gains in August. However, the latest findings indicate that there hasn’t been a significant uptake in activity on its blockchain – which could be a sign of strong gains.
Bitcoin dropped 2.4% to $47.337.2 but ended August up around 14%
BTC’s strong gains in this month haven’t given Bitcoin’s network the boost it needed. This divergence is strikingly similar to the rally of mid-to-late 2020, which saw popular crypto rise fourfold.
According to Glassnode, data from earlier this week shows that the number of active entities on the Bitcoin network is around 275k per daily, which is around 35% less than the January peak.
Glassnode said that the current levels of on-chain activity were an “impressive divergence” that was’similar to the stable prebull accumulation range established in mid- to late 2020.
Another sign that fundamentals are improving is the decline of short-term bitcoin holders, who were blamed in panic selling following the recent crypto crash.
Glassnode says that young coins (those less than three months old) now account for only 15% of the coin supply. A strong downtrend is also in play.
Institutional investors have also helped to make the long-term BTC bull case. However, they are still in the early stages of adoption and keen to use the diversification benefits offered by BTC in their investment portfolios.
According to our calculations, there has been a moderate positive correlation between monthly BTC return and major equity indices. Pearson’s coefficient for the past five years was c 0.27-0.29 (c.0.16-0.18 over the previous 10 years). Edison Research stated in a note.
It added that, “Together with BTC’s strong performance over the longer time horizon (despite c80-90% de-ratings during previous peak bear markets), this translates to a positive effect even for a small 1-5% allocation of BTC.”
