Bitfinex Analysts Say BTC Is In ‘Transition’

by James · April 4, 2023

The number of Bitcoin wallets with non-zero BTC balances recently hit a new all-time high of 45.388 million.
However, daily active addresses and daily confirmed transactions have declined.
Bitcoin price remains bullish, but analysts are urging caution as on-chain metrics indicate weakness amid renewed correlation with the S&P 500.

Bitcoin price is currently trending above $28,300, up about 0.7% in the last 24 hours. The weak rally follows the crypto market moving beyond rumors surrounding a Red Notice order for Binance CEO Changpeng Zhao.

Bitcoin’s resilience also comes after the market reacted upwards to Twitter CEO Elon Musk’s move to replace the platform’s bird symbol with a Shiba Inu dog, a symbol for DOGE – the original symbol of the original meme crypt Dogecoin.

The DOGE price increased by more than 30% to above $0.1 for the first time since the beginning of December 2022.

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Bitcoin growth outlook: non-zero balance wallets hit 45.4 million

Bitcoin continues to see strong demand as non-zero wallets grow to more than 45 million, according to details shared in the latest Bitfinex Alpha report.

But even as the benchmark cryptocurrency registers a new high for small BTC holders, with this the fastest non-zero balance wallets growing since early 2021, analysts commenting on the Bitcoin price in the report suggest that investors may need to be a little cautious in the short term .

#Bitcoinits non-zero balance addresses reach new highs, even though the number of active addresses on the Bitcoin network and the number of daily transactions have decreased
This indicates the need to be careful, and a market in transition 📈

— Bitfinex (@bitfinex) 3 April 2023

According to data from the chain, the number of non-zero addresses reached 45.388 million last week as the Bitcoin price held above $27,000 to end the first quarter on a bullish note.

The jump in non-zero wallets marks a positive development for the network and for the Bitcoin price, with this metric’s growth suggesting that more investors have recently entered the Bitcoin market. Regardless, an increase in non-zero balance holders often points to new demand, especially from small investors.

Still, aside from this positive outlook, other metrics on the chain suggest that bulls may need to be cautious in the near term. As mentioned in the Bitfinex Alpha report, the market is in transition and indecisive.

“A transitional state is characterized by choppy market conditions where the price consolidates in a tight area before trending in either direction. Despite an influx of new market participants, the sustainability of this phenomenon remains with both rapidly growing non-zero balances and tight range trading for Bitcoin. unsure“, they noted.

BTC Price – Key On-chain Values Suggest Weakness

Bitfinex analysts suggest that other metrics indicate that the Bitcoin price may continue to consolidate around $28 as both bulls and bears remain indecisive.

Among important on-chain metrics to watch are bitcoin network statistics related to daily active addresses and daily confirmed transactions.

For example, the 7-day moving average of daily active addresses recently fell to levels last seen in late January. The number of confirmed daily transactions has also decreased.

Over the past two weeks, the Bitcoin network has recorded a 7-day average of 293,058 transactions, and the March 30 numbers suggest a 13% decrease from data recorded on March 8. The Bitfinex analysts commented on the two calculations:

“Although this is an uncertain indicator in terms of bullish or bearish signals, daily activity and transaction declines for Bitcoin have always occurred during transitional phases in the crypto market. They suggest indecision and an unsettling predicament for both bulls and bears.”

Bitcoin’s Correlation with the S&P 500 – Is It Rising Again?

As bulls attempt to rally above $28,000 again, data shows that BTC’s correlation with stocks is increasing after falling significantly in early March, with BTC price outperforming the major US indices for the month and year-to-date at end of Q1 2023.

However, according to the Bitfinex report and as CoinJournal analyst Dan Ashmore highlighted last week, Bitcoin is on track to recover its correlation with the S&P 500 and the NASDAQ Composite as the price continues to hover between $27k and resistance above $28k.

In particular, the Pearson calculation shows that the BTC/NASDAQ correlation is up to 0.61 while the correlation with the S&P 500 is 0.12.

Any value above zero indicates a positive correlation, and these numbers suggest that Bitcoin may be trading more in lock step with stock indices amid macroeconomic headwinds.