Bitcoin – the largest crypto by market capitalization in the crypto market is well known for many other things. The grandfather of cryptos, which has the largest trading volumes in the market too. According to CoinMarketCap, Bitcoin’s 24 hour trading volumes stand at about $24 billion as of writing! To understand the scale, Ethereum, which is the second largest crypto by market cap has a 24-hour trading volume of about $8 billion as of writing. The only other crypto that has a trading volume above Bitcoin is Tether (USDT) – which is a stablecoin used to trade in various cryptos, hence doesn’t really qualify.
Now that we know Bitcoin is the most traded crypto out there, let’s take a look at some of the broader indications that you can use to take your first trade in Bitcoin too.
As is evident from the chart above, Bitcoin daily hashrate chart has been on a steady upward trend ever since the beginning of 2022 – despite the raging bear market that ensued in the same timeframe. However, since the beginning of the new year of 2023, Bitcoin hashrate – which had fallen down significantly towards the end of the year amid the holidays – has managed to recover strongly along with the increase in BTC price. Bitcoin daily hashrate has climbed steadily going from around 253 million terahashes per second on 1 January, 2023 to nearly 274 million terahashes per second as of writing.
Now why is Bitcoin hashrate important? For any proof-of-work (PoW) based blockchain network, hashrate essentially depicts how secure a particular network is and how many miners are there on the network, continuously competing to secure, complete and add the next block to the blockchain.
Read more: BTC Price Prediction
Bitcoin Fear and Greed Index is 55 – Greed
Current price: $22,963 pic.twitter.com/R3gTve8pup
— Bitcoin Fear and Greed Index (@BitcoinFear) January 27, 2023
The Bitcoin Fear & Greed Index which had slipped into the extreme fear territory in the last two months of 2022 has recovered strongly since the beginning of the new year thanks to a strong recovery in BTC price. This is a multi-factoral crypto market analysis that analyses the sentiments of the market participants. It does so by calculating several metrics including volatility, market momentum, volume and social media sentiment of a particular crypto, in this case, Bitcoin. However, as of writing, Bitcoin’s fear and greed index is in the borderline greed area as there has been a strong recovery in BTC price and seems like it will continue!
According to data from IntoTheBlock – only about 36% of the holders are below their purchase price on their Bitcoin investments. Along with that, about 61% are in the money, which means they are still holding on to some unrealized gains on the books while the remaining 3% are at break-even. This shows that the recent BTC price recovery has brought a lot of investors and HODLers back into the green.
Since the beginning of 2023, Bitcoin has been seeing a strong rally in price and has been single handedly responsible for pulling the crypto market up. It is very evident from the rise in Bitcoin’s market cap dominance, which has gone from sub-40% levels to over 43% as of writing! In fact, Bitcoin market cap dominance has seen a near 8.5% jump in the past week alone!
This means that as Bitcoin price is rising in the current market scenario, the broader market recovery is being led by none other than the king coin and is thus continuing to gain market cap dominance.
Read more: BTC price prediction
As we can observe from the chart above, Bitcoin volatility index has been on the downslide for over two months now, but has been spiking ever since the beginning of 2023. This spike is coming in amid the strong recovery in Bitcoin prices too, which is a sign that Bitcoin price rise is bringing in greater volatility in the market and traders need to be more careful. BTC price recovery over $21,000 as of writing is a strong bullish signal, however, choppy trading sessions lie ahead! However, despite the jump the volatility seems to have cooled off a little bit in the last week or so, signalling some relief for traders.
The recent recovery in Bitcoin prices has brought about a very welcome change in the data from the Grayscale Bitcoin Trust as the Net Asset Value or the NAV for the GBTC has recovered from record lows. However, in the last couple of days, despite the upward move in Bitcoin prices, GBTC discount to the Net Asset Value (NAV) has fallen from around -36% early last week down to -41.5% as of writing, according to data from Yahoo Charts.
As of writing, three of the four futures funding rates on exchanges for Bitcoin are on the positive side, as depicted in the image above – which is a decently bullish indication, and is pretty much in line with Bitcoin’s current price action since the beginning of 2023.
Now let’s understand funding rates – a funding rate is essentially an amount of fund paid by traders holding perpetual futures to hold on to their positions. This is enforced by futures exchanges primarily to ensure that futures prices do not fluctuate too much above the actual spot price of the asset. Hence a positive funding rate indicates trading holding long positions are willing to pay extra to hold on to their positions while a negative funding rate means that traders holding short positions are willing to pay to hold on to their contracts.
Thus in conclusion from the above observations, we can clearly conclude that Bitcoin’s current situation looks pretty bullish as of now, thanks to positive funding rates, improving hashrates, and an increasing Bitcoin market cap dominance. However, the spike in BTC’s volatility index and a 55 on the fear and greed index have become a slight concern, though nothing to worry about too much. One can do good to just keep an eye out for these while investing or trading with BTC at the current situation.
Values as on 27 January, 2022.
Read more: Top Cryptos that crashed more than 70 percent in 2022