On-Chain Bitcoin fundamentals suggest a strong case for a continued bullish rally
At the time of writing this article, Bitcoin was consolidating at a price point of $9853. From an industry perspective, it is not a bad turnaround as a majority of the community expected that asset to decline severely post-halving. The 15% collapse right before the event, had taken Bitcoin down to $8100 but the largest digital asset has been irrepressible at the moment.
Post-halving, BTC has managed to sustain a position in the upper range of $9k range, and a strong argument can be made that the improving on-chain metrics over the past couple of months is playing a major role.
According to Arcane’s recent weekly update, data from Bytetree suggested that the NVT ratio for Bitcoin is reaching levels that usually designate faster growth in the industry. Network Value to Transaction ratio measures the price of BTC with respect to the value transferred over the Bitcoin Network.
When the ratio is higher, the NVT ratio indicates that the asset is outperforming the value transmitted by the network, and investors are valuing it from a long-term perspective.
The chart above suggested that information for the past three years indicated whenever NVT crossed a ratio of 10, it produced a period of price surge of Bitcoin. Such lucrative spells were witnessed in 2017, 2019 and now in 2020.
The major importance of this metric is the fact that it falls in line with the rising fundamentals of Bitcoin at the moment.
The number of active entities currently in Bitcoin is above the levels of 2019, and improved network traffic would be extremely in order for the valuation ot continuing rising during the 2nd half of the year.
Bitcoin 7-day average reaches yearly high
Another important statistic that was observed over the past week is related to Bitcoin’s trading volume. After a period of a slump in the middle, Bitcoin registered the highest 7-day average trading volume over in the past week in 2020, after averaging $2-$3 billion in trading on a regular.
From an engagement point-of-view, it is an incredible feat but it is important to note that the halving event was also involved over the past 7-days.
Too early to count?
Although these improvements speak for themselves, it is still early to say that Bitcoin will be able to sustain such high levels of engagement over the next few months.
From a market point of view, for the bullish momentum to continue in the 2nd half of Q2 2020, Bitcoin prices would need to consolidate above $9000 to avoid market capitulation. If the digital asset industry remains at a distance from the volatility brewing over the traditional asset class, the next half of 2020, may as well witness Bitcoin breach its 2019’s high valuation of $13,800.