Bitcoin Holds $17k As Technicals Indicate Sustainability
$335 billion. That is bitcoin’s record for total market capitalization thus far. Where is it today? $316 billion. Only $19 billion away from being in the same position when bitcoin reached $20k. Since its yearly lows below $4k in March bitcoin has rebounded by more than 330% and 130% for the year of 2020.
Despite strong performance in spot markets, primarily fueled by North American buyers, exchange trading volumes remain relatively unimpressive. The chart below shows us the lack of activity in Coinbase’s platform when compared to the 2017–2018 rally.
Part of the inactivity is due to the fact that more and more investors are adopting a long-term strategy to bitcoin. This can be seen through a metric called HODL Wave. Long-term bitcoin holders are referred to “HODLers” and the One-Year HODL Wave rose from 59% to over 62%. It’s now at all-time highs, signifying a clear accumulation trend.
Let’s look at the funding rates. During bull cycles, the funding rates of bitcoin can significantly spike as buyers overwhelm short-sellers. If there are more longs than shorts, the funding rate becomes positive and then buyers have to compensate short-sellers and vice versa. Throughout the past several months, the funding rates has remained at around 0.01% or sometimes below it. This tells us that there is a decent balance between buyers and sellers and the market is not overheated yet.
The last bullish indicator to touch on is the reserves on exchanges are dropping. As of October 16th, around 145,000 bitcoin has moved out of exchanges throughout the past month. The $2.3 billion monthly outflow suggests that investors are looking to take their assets and lock them up for security. They have no intention of selling soon since bitcoin way from exchanges tend to make them illiquid.
Let’s not be too biased and look at an indicator flashing red. That would be the Crypto Fear & Greed Index. This measures the market sentiment which is at 90 out of 100. This level screams “extreme greed” and anyone looking to get into bitcoin should hold off to see if there’s a pullback on its way.
This level was only reached once before at the top of the bull run in June 2019. Although the useful insight into the current euphoria, it should not be an entirely reliable indicator as the level of attention bitcoin gets each year exponentially increases.
