November 7, 2023
A crypto trader has identified several on-chain signals that indicate Bitcoin (BTC) is gaining bullish momentum. This analysis is based on the creation of hundreds of thousands of new Bitcoin wallets on Sunday, as BTC reached $35,000.
The first signal is the significant increase in the number of new BTC addresses created. More than 700,000 new addresses were generated on Sunday alone, marking an important milestone in BTC network growth. This growth is considered one of the best predictors of price movement.
The second signal is the cost basis of long-term BTC holders. Currently, Bitcoin's price is above the average acquisition price of all coins held for over six months. Historical data suggests that this on-chain metric has preceded major bull rallies in the past.
If BTC maintains its price above the six-month to three-year holder cost basis, it could indicate a shift to a bullish market sentiment. Previous instances where BTC surpassed this level resulted in significant bull runs, with gains of 4,778%, 99%, and 787%.
At the time of writing, Bitcoin is valued at $34,922.
The analyst also highlights the substantial amount of capital flowing into digital assets. Over a 30-day period, crypto witnessed inflows of billions of dollars, reaching the highest level in 2023 at nearly $10.97 billion.
The combination of on-chain signals and market analysis suggests that Bitcoin is gaining bullish momentum. The increase in new BTC addresses and the price surpassing the long-term holder cost basis indicate positive market sentiment. Additionally, the significant capital inflows into digital assets further support this outlook. Investors should consider these factors when making investment decisions in Bitcoin and other cryptocurrencies.