A key indicator suggests Bitcoin still has room to rise

Bitcoin’s market cap temporarily surpassed Tesla’s as the cryptocurrency’s price surged to a new ATH of $41,940. Although Bitcoin was down a bit at press time due to a wave of corrections, bulls say Bitcoin is headed for higher numbers amid a weaker dollar and growing institutional demand.

While some indicators predict that the Bitcoin price may correct, this may be temporary in the larger context. In fact, just recently, Glassnode revealed that Bitcoin’s Adjusted Dormancy Flow reached a crucial bullish threshold.

According to David Puell, an independent analyst at Glassnode, “Adjusted Actual Dormant Flow is the ratio of current market capitalization to annualized dormant value in USD. It can be used to time market lows and assess whether the bull run is still in a relatively normal state. It helps confirm whether Bitcoin is in a major bullish or bearish trend.”

By comparing two ratio components and presenting them as a simple oscillator, Dormancy integrates all of these narratives into one metric where high Dormancy is bearish and low Dormancy is bullish, depending on the trend.”

Before the bull run began in 2020, some investors had been betting that digital assets would rise more than ever before. At the time, the expected price drop became a reality as some retail traders did sell.

However, despite the current market trend that has seen Bitcoin double from $20,000 to $40,000 in just a few weeks, holders still do not want to sell , indicating that traders appear to believe in BTC’s potential to reach higher numbers.

Regarding the selling pressure in the market, Chainalysis reports the opposite. According to the company’s data, the BTC inflow to exchanges in the past 24 hours reached 1.2772 million BTC, which is higher than the 180-day average. In addition, Glassnode pointed out that the BTC exchange inflow (1-day moving average) reached an ATH of $132,812,085.62.

However, any additional market supply on exchanges could be met by demand. Tether inflows could also signal increased buying pressure . In fact, according to Chainalysis, USDT inflows to exchanges in the past 24 hours were 1.18B USDT, also above the 180-day average.

In addition, the increase in transaction intensity indicates that more market participants want to buy rather than sell. As shown in the figure below, the median transaction intensity of BTC during the same period was 6.77, which is higher than the 180-day average.

Additionally, Glassnode recorded a new ATH for on-chain active Bitcoin addresses earlier yesterday. The last time these addresses reached such a high was in late 2016 to early 2017, when the Bitcoin bull run began.

Lastly, Even Skew revealed that open interest in Bitcoin options has surpassed $10 billion on various exchanges, including CME.

Additionally, the new data also found that increased awareness of Bitcoin as a store of value and increased trading activity are reducing liquidity in Bitcoin. In fact, analysts have been saying that illiquid Bitcoin will further increase scarcity, therefore painting a “potentially bullish picture for Bitcoin” in the coming months.

The original text comes from ambcrypto and was translated by Blockchain Knight. The English copyright belongs to the original author. Please contact the translator for Chinese reprint.