Key Points
- On-chain data indicates a potential for further gains in Bitcoin’s price due to renewed buying interest and lower supply on Binance.
- Open Interest and active addresses data suggest stronger market participation.
Bitcoin (BTC) has experienced a tumultuous start to the year, marked by an early rally followed by a sharp correction. However, the cryptocurrency recently experienced a surge on January 20th, pushing its price to a new all-time high of over $109,000. Despite a minor pullback, Bitcoin’s price remained 3.5% higher in the last 24 hours, reflecting a double-digit gain over the past week.
On-chain metrics and market sentiment
Analysts have been closely monitoring key on-chain metrics amidst this price activity. According to one CryptoQuant analyst, the Binance Netflow SMA30, a 30-day moving average of netflows on Binance, provides valuable insights into market sentiment and price trends. Notably, shifts in this metric often coincide with significant price movements, suggesting that the current rally may continue.
The Binance Netflow SMA30 has historically been an effective indicator for predicting Bitcoin’s short-term price direction. When the metric shows a positive value, it often signals increased selling pressure as more Bitcoin flows into Binance. Conversely, a negative Netflow SMA30 typically indicates reduced spot supply and stronger upward momentum. As of January 17th, the SMA30 returned to negative territory, hinting at renewed buying interest and the potential for another rally.
Additional market indicators
Apart from the Binance Netflow SMA30, other indicators provide a broader perspective on Bitcoin’s near-term outlook. Open Interest data from Coinglass shows a 4.61% increase in the last 24 hours, reaching a valuation of $71.21 billion. This increase, along with a 156.60% rise in Open Interest volume, reflects growing trader engagement and potential momentum in the derivatives market, which can influence Bitcoin’s spot price.
Furthermore, Glassnode data on active addresses, which can be used as a proxy for retail participation, revealed recent spikes in user activity. The number of active addresses surged from below 1 million earlier this month to 2.2 million by January 17th, before retreating to 1.1 million as of January 19th. Despite this fluctuation, the overall increase earlier in the month suggests that more participants are engaging with the Bitcoin network.