Over the past few weeks, Bitcoin (BTC) price has rallied after months of apparent currency stagnation. Since July 23rd The value of a single bitcoin has increased by around 20%. Not just that after trading sideways since its supply cut in early May. The major currency has crossed its all-important psychological threshold of $ 10,000, causing many casual investors to get back on the cryptocurrency train.
The recent price spike in Bitcoin has also sparked a boom in retail. A slew of trading platforms around the world reported sky-high Bitcoin trading volumes. As a result of this bullish market activity, Joe DiPasquale, senior cryptocurrency expert and CEO of BitBull Capital, recently stated that this latest surge is once again creating an element of FOMO that stands for “fear of missing out” and that it could be translated into Spanish for fear of missing out on the opportunity among the casual investor who thinks they may be late for the cryptocurrency party.
Joshua Frank, co-founder and CEO of The Tie – a provider of data aggregation tools – repeated to Cointelegraph that lThe volatility has generated significant new waves of interest and investors in Bitcoin, particularly with the most recent of $ 9,000 to $ 12,000. Frank pointed out that the average 30-day number of Twitter users are talking about Bitcoin has increased from 24,000 to 30,000 in the past two weeksand added:
“Bitcoin hit its highest daily tweet volume level since June 26, 2019 following the July 16 Twitter hack. While it’s not clear that the previous period correlated in any way with the hack, we’ve seen this in the past If all other things are the same, the more users talk about Bitcoin, the better the asset will perform. “
Denis Vinokourov, head of research at BeQuant, a cryptocurrency exchange and institutional brokerage service, told Cointelegraph so Since volatility has increased, his company’s trading volume has increased 40% compared to the summer daily averages before this recent surge.
Important cryptocurrencies are mobilizing quickly
Cointelegraph also discussed recent market actions with Adam Vettese, a market analyst with the forex trading and investment platform eToro. He noted that since cryptocurrency prices began in late July, the number of crypto positions opened has increased 115% in the past 14 days. During the same period, the volume of trading in crypto instruments also increased by 162%. The number of open positions in Bitcoin increased by 222% with an increase of 421% for Ether (ETH) and 170% for XRP.
Christophe Michot, sales director for the digital asset trading platform CrossTower, also said his company had been watching over the past few weeks a 219% increase in daily trading volume and a 66% increase in the number of daily average registrations over the same period.
Michot also noted that the market as a whole has seen a strong uptrend since the retreat in mid-March. For example, Bitcoin has rebounded over 210% and Ethereum has rebounded 364% since crashing on “Black Thursday” March 11, 2020.
The rally in the crypto market is due to positive news such as the recent clarification by the U.S. OCC that allows banks to hold Bitcoin in custody, as well as the announcement of another stimulus package that the Federal Reserve will in a near future, some of which Experts believe they will continue to depreciate the US dollar.
People’s sentiment towards cryptocurrencies is rising rapidly
On July 12, Bitcoin’s long-term sentiment value – a comparison of investor sentiment over the past 50 days versus the previous 200 – hit a new all-time high that led to Bitcoin’s rally at the end of the month. Similar, Daily Sentiment Score is a measure of how positive or negative Twitter conversations have been about a particular currency in the past 24 hours compared to the past 20 days.
The Daily Investor Sentiment Score stayed positive (over 50) every day from July 20th to August 1st. Even after Bitcoin hit the $ 12,000 mark and fell back $ 1,400, investor sentiment fell below 50 for just about 28 hours, indicating that investors continued to be extremely positive on Bitcoin.
Frank told Cointelegraph that about 68% of all tweets talking about Bitcoin’s long-term financial future in the past month were positive. Similarly, Michot added that the market is in the early stages of a new bull run, according to CrossTower media data, adding: “Another positive feeling comes from family offices and other traditional consulting firms. These companies are seeing increased demands from customers looking to get involved in cryptocurrency markets.“.
Other crypto-related offerings are also flying high
Since the recent surge in crypto began, stablecoin use has increased and the demand for other DeFi tokens has increased significantly.. John Todaro, director of institutional research at TradeBlock, a trading platform for institutional investors, told Cointelegraph:
“Stablecoin circulating supplies have grown significantly over the past 6 months, with Tether having deposits of around $ 10 billion and USDC deposits of over $ 1 billion. This may seem small, but these deposits make it Circle and Tether are to some extent de facto banks with sizeable customer deposits. Customer deposits of $ 5 billion to $ 10 billion are the equivalent of a US small or medium-sized commercial bank. “
Todaro added that while retailer acceptance of stable coins remains limited, These assets are in high demand in developing countries as well as in countries with political instability such as Latin America, parts of the Middle East, and to some extent Hong Kong. He also noted that the volume of derivatives has increased lately (in Deribit, CME, and others), but a large part of it is related to price movements as increased volatility almost always leads to higher prices. Trading volume.
Vinokourov believes the recent period of low volatility and low trading volume has become one of the busiest periods for digital assets in recent times: “Spot volume and derivatives locations increased as Bitcoin traded above $ 11,000 and other large-cap assets followedVinokourov continued:
“Particular attention should be paid to the evolution of the volatility profile of Ethereum, which despite its recent peak is still elevated compared to Bitcoin. This suggests higher potential volatility for the second largest cryptocurrency.”
The correlation of Bitcoin’s Fear and Greed Index with its price
Another aspect worth exploring is the relationship that may or may not exist between the Fear and Greed Index, translated into Spanish as the Index of Fear and Greed, of Bitcoin and its price, and whether or not the metric can suggest a possible price direction. Present your views on the matter, Todaro believed that the index is calculated based on a few variables, some of which are influenced by price, which forces the index to keep track of certain elements like the speed of price gains and the high prices of all timing and price dynamics among others .
For example, when the market is falling sharply, volatility increases and the index concludes that the market is very fearful. In this way, the index ultimately tracks the price. In addition, the index records Google trends, with a high level of interest in positive cryptocurrency terms meaning high greed. So, Todaro believes the index can be used to make current and future investment decisions.::
“While Bitcoin’s price hasn’t returned to its all-time high, it was the fastest price rise in 10 days in its history that would be considered extremely greedy. Perhaps it’s time to sell – and wait until again.” Backtrack. “
Another correlation worth exploring is that between Bitcoin and the SP 500. According to Mati Greenspan, founder of Quantum Economics, the previously high correlation between cryptocurrencies and the SP 500 has declined::
“We can clearly see at the beginning of this year where the correlation rose to 0.6 due to the expected sale of multiple assets by the pandemic, but now we’re back below 0.2, which basically means that it is already . ” there is no correlation in everyday life. “
In addition, Greenspan noted that even a peak of 0.6 is a very weak correlation, adding: “Many stocks have a very high correlation with one another, usually above 0.8, even if they are in completely different industries, and many altcoins are similar“.