New Delhi (CoinChapter.com) — Bitcoin shows signs of recovery after rebounding strongly from its May 19 low of $30,000. On the day, the cryptocurrency market, on the whole, wiped about $830 billion off its net valuation.
But recently, the BTC/USD crossed the long-awaited $40,000 mark on a weekend bull rally that carried on to Monday. However, as the market corrected on Tuesday, the token prices declined. Nevertheless, analysts remain optimistic about BTC trends, as three indicators foretell that the uptrend is not over yet.
Network User Growth
The network effect describes how the value of an asset increases as more people use it. For cryptocurrencies, more users imply wider acceptance of a token in the financial sector. Also, as the number of investors increases, more BTC is taken out of circulation. Hence, its active supply decreases, which may boost prices as the demand grows.
The user growth rate on the BTC network has been rampant by the decline in Bitcoin prices. In a bear market, investors and traders end up profit-taking to avoid further losses, leading to a sharp decline in user growth rates. In the chart above, the rout of Jan 2018 witnessed such a decline.
Another indicator, Liveliness, helps identify trends in long-term token holders’ accumulation or spending. Glassnode recently tweeted that BTC liveliness began a downtrend entering June, which forecasts bullish movements for the crypto.
Bitcoins And Stablecoins
Stablecoins are dollar-pegged tokens that tend to speed up liquidity between crypto assets on exchanges. Traders treat them as equivalent to the dollar. Therefore, their stablecoin deposits into exchanges tend to alter analysts about a potential buying demand for cryptocurrencies. Similarly, their higher withdrawal rate suggests an impending selling pressure.
Meanwhile, a stablecoin oscillator ratio (SRO) measures the amount of Bitcoin on exchanges relative to the number of stablecoins. When the ratio’s moving average enters the lower bound, it signals an ideal entry-level for the BTC/USDT traders.
As such, the stablecoin ratio oscillator has bottomed out, which implies buying has started. Thus, a new high for BTC may be around the corner.
HODLers Are Settling In
HODLers are investors who buy and hold their positions regardless of the price. It is a popular practice for Bitcoin investors, who circumvent all the market volatility by going for the long-run profit.
As Bitcoin moves from short-term investors to Hodlers, the price strengthens. So, when Hodlers buy the dip to augment their position, the supply of BTC decreases. With the increased buying activity, a decreased supply boosts prices due to increased demand.
Glassnode co-founders tweeted that the net exchange flows have started to reverse, indicating an increase of positive sentiment in investors.
Delphi Digital, a research firm for the digital asset market, also tweeted about market buying mentality. The firm mentioned that an indicator of BTC Hodlers mindset has recently flipped positive, indicating an increase in buying activity.
Price Chart For Bitcoin
BTC prices declined today by 0.04% after opening at $38,125.
The token’s prices are above the 200-Day Moving Average (blue) line on the four-hour chart, indicating an uptrend. Also, the next resistance level for the token is at $41,000, while support is at $37,000.
At the time of writing, Bitcoin was trading at $37,830 per coin.