Bitcoin dominance hits 5-year high, rally possible
The Key Takeaways
- Bitcoin dominance reaches a 5-year high at 57.68%.
- Technical indicators suggest potential price increases.
- On-chain activities and network data show continued growth.
- The MVRV ratio suggests a potential buying opportunity.
Bitcoin Dominance Reaches 5-Year High
Bitcoin has recently achieved a significant milestone. The cryptocurrency’s market dominance rose to 57.68%, a level last seen in April 2019. Historically, such dominance has often led to a prolonged upward trend. Some experts speculate that this could be a precursor to a potential “mega rally.”
Technical Indicators: Potential for Further Price Increases
Bitcoin’s Relative Strength Index (RSI) is currently at 51, indicating a neutral market. There are no clear buy or sell signals. However, the Bollinger Bands show that the price is near the upper limit, which could indicate an upcoming price swing to the upside, especially if Bitcoin breaks the resistance level at USD 59,000 with high trading volume.
Long-Term Investors Show Confidence
Bitcoin reserves on exchanges currently stand at 2.585 million BTC. Over the last 24 hours, there has been only a minimal increase of 0.04%. This suggests that there is short-term selling pressure. At the same time, the longer-term trend shows that investors are moving their holdings from exchanges to so-called “cold wallets.” This is a sign that they believe in Bitcoin’s long-term success.
Network Activity Remains Strong
The number of active Bitcoin addresses increased by 1.13% in the last 24 hours, reaching over 8.4 million. The number of transactions also rose by 0.83%, reaching 515,260. These data points show that the network continues to be heavily utilized and support Bitcoin’s growing dominance.
MVRV Ratio: A Signal for Buying Opportunities?
The 60-day MVRV ratio (Market Value to Realized Value) is currently at -1.81%. This means that, on average, investors are holding Bitcoin at a slight loss. Historically, a negative MVRV ratio often indicates that the market is undervalued. This could present an opportunity for investors to acquire Bitcoin at a favourable price.
Could Bitcoin Lead a New Bull Run?
With dominance over 57.68%, strong on-chain fundamentals, and positive technical indicators, Bitcoin could be on the verge of another significant price rally. The key will be whether the price can sustainably break the USD 59,000 mark and whether network activity remains strong. This could pave the way for a broader market upswing.
Our Assessment
The current data suggests that Bitcoin is in a strong position. The rising dominance, coupled with positive technical signals and robust network activity, could mark the beginning of a new upward trend. However, investors should closely monitor market conditions, particularly price movements around the USD 59,000 level.
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