Bitcoin’s market is going through a tug of war to decide whether it will revisit $30k or $25k next, as per the latest Santiment insight report. The report suggests that one of the critical factors driving any crypto asset’s growth in market cap is its growth in utility.
Historically, price rallies have been brief unless there is an increase in the number of coins being transferred between addresses and a corresponding increase in the number of addresses engaging with those coins.
The report cautions traders regarding bull traps that can arise when prices increase rapidly without a corresponding increase in utility.
In such situations, traders may succumb to FOMO (fear of missing out) and invest in inflating market caps. However, they may get caught off guard when the rally abruptly stops shortly after their purchase.
The report highlights three different metrics that illustrate the occurrence of bull traps, including trading volume, daily active addresses, and circulation.
Trading volume peaked during the initial rise above $25k on March 14th and quickly dropped back down to its lowest levels since the first week of 2023.
Although there has been a slight increase in the number of unique addresses interacting on the BTC network, the amount of individual tokens being moved per day hasn’t been as impressive as the address activity metric.
Additionally, the report points out the bearish divergence bars displayed by the current NVT Sansheets model.
According to the report, the divergences identified are likely to impede the network’s ability to sustain its previous levels of success, which were observed in the crypto market for Bitcoin and other cryptocurrencies during October and November of 2021.
The report suggests that in order for the crypto markets to experience positive outcomes, there must be improvements in the on-chain utility conditions.
Nevertheless, the latest Santiment insight report highlights the importance of on-chain utility levels for the sustained growth of Bitcoin and other crypto assets.
The report warns traders about the occurrence of bull traps and emphasizes the need for rising amounts of coins moving from address to address and increasing numbers of addresses interacting with those coins.
Bitcoin (BTC) Price Analysis
Based on the latest data from Coinmarketcap, the current trading price of Bitcoin is $27,383.06. On an hourly basis, the coin has experienced a slight 0.03% decrease, while on a daily basis, it also shows similar losses. The weekly chart shows a significant drop of 9.90%. Additionally, the 24-hour trading volume is down by 4.46%.
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