Is Bitcoin’s Rise Due to an External Cause? What the data suggests
The world’s first and largest cryptocurrency is taking gallant steps towards the green in a recent turn of events. Bitcoin is experiencing a sharp price increase in its market. Recent trading activity saw BTC’s price reach the $24,000 mark. This creates a positive record for the best cryptocurrency in the industry.
Although Bitcoin is making a huge improvement in value, the number of active addresses seems to be declining.
The sudden price increase for BTC probably has little to do with the overview of the crypto market. This upward trend occurs due to external pressures that increased the price. But the irony is that there is no noticeable increase in the number of active wallets.
Records from on-chain reports show that Bitcoin’s number of active wallets is relatively low. Crypto Quant, an on-chain research firm, provided its data indicating a downward movement for the active addresses. It reports that new contracts are emerging in the futures market as prices continue to rise.
This contradicts the current trend in the crypto futures market which shows increasing momentum. Since the peak is not from an internal influence, the sustainability of the current positive pressure and price increase is quite unclear.
With new contracts opening, the futures market is experiencing higher crypto prices. Short-term cryptocurrency investors also take positions in the futures market. Such activities always create increases in prices. Therefore, the significant market price increase is the final outcome of the sudden increase in long positions.
Possible reversal on short-term Bitcoin speculation
In addition, the short-term speculation in the futures market can ensure a quick reversal at any time. Such indications can turn prices in the future in any direction.
The report from research firm Crypto Quant also confirms that the use of directional bets at the moment when it comes to important macro data spells increasing doom. There are great opportunities for a quick change of direction in the short term. Therefore, the importance of achieving sustainability will depend to a greater extent on risk management.
Currently, the value of BTC is slightly above $24,000. The impact of macroeconomic activities during the week can trigger volatility in the Bitcoin price. The US inflation data, due on Wednesday, also has a role in the overall result.
Conversely, it appears to be a more accurate indication of the BTC price forecast for August. According to community predictions, Bitcoin may reach the $28,000 level by the end of the month.
Featured image from Pixabay, chart from TradingView.com
