Bitcoin bulls have rallied to $ 7,201 at press time, breaking through major resistance on the upside. In fact, this price action could pave the way for stronger profits amid halving in the coming month. Interestingly, the price divergence pattern Santiment's DAA is flashing a rising signal. Basically, this model measures the relationship between daily active Bitcoin addresses (the number of addresses that have moved assets on any given day) and its price.
For the past 6 months, the price of the world's largest cryptocurrency has followed a "balanced and healthy rate," along with online daily addresses. However, this trend stopped abruptly when Bitcoin collapsed on March 12.
When the Dark Thursday happened, prices plunged spirally and wiped out most of the accumulated profits in 2020. In contrast, the number of active addresses did not decrease and created a constantly rising divergence near 2 weeks until the first week of April.
After that, Bitcoin quickly rose above $ 7,000 but pulled back to $ 6,600 on April 7, just as the price caught up with DAA shortly thereafter, each signaling a divergence of decline before the aforementioned move. Notably, after more than a week now, DAA divergence has increased again.
At the same time, the number of active addresses increased to a 9-month high. Santiment concluded:
"With prices close to where we were back on the 7th, DAA once again showed that prices would rise faster than prices, which is why we look see this bullish divergence on your model”.
While the growth signal of the Bitcoin network continues to highlight the underlying strength in the bearish zone, the InTheMoney (and money) signal has also turned to bullish. This signal calculates the net change of cash inflows / flows in the addresses and has had a long period of decline. At the time of writing, this index is positive with a value of 0.42%.
In addition, the inflow / outflow around the current price of IntoTheBlock (IOMAP) reaches nearly 1.8 million addresses, a number that can essentially push Bitcoin beyond $ 7,500. The $ 6,700 support level seems to have created a strong stronghold with 1.3 million addresses holding nearly 1 million BTC.
This, along with the positive movement of prices combined with the revival of the uptrends shown by the DAA divergence model and the momentum signal of InTheMoney as well as the increased hashrate, can push Bitcoin to a higher level when it does. Nearly halving takes place in less than 1 month.
Besides, ETH imitates. However, the potential increase divergence for ETH's DAA has yet to come. Having said that, the bearish divergences for the past 10 days seem to be weak. A high correlation with BTC is likely to lead to a change in the aforementioned weak discount divergence in the coming days.
Many mixed signals
Joel Birch, co-founder of investment services Staked and trader, explained how Bitcoin will return to the five-digit price range.
According to Birch, Bitcoin prices and trading volumes have been taking different paths since the dreadful Dark Thursday. With a bit of this information, inconsistent signals can be a bad omen for cows.
$ BTC price has been increasing while volume has been decreasing, inside a 20% channel, for a month now.
This is bearish AF, which is exactly why we fairly pry gonna pump back to $ 10k in one candle.
- Bitcoin Birch 👨💻 (@BitcoinBirch) April 17, 2020
“The price of BTC has increased while the volume is falling inside the 20% channel for 1 month now.
This is a discounted AF, which is exactly why we will bounce back to $ 10k in one candle. ”
Birch even emphasizes both trends that have fallen into 20% channels. This shows the prospect of a price decrease but only a short-term one. Bitcoin is expected to rise rapidly above $ 10,000. Traders are guaranteed to be so great that trading charts saw that in a green candle.
Twitter followers cannot guess which candles are being talked about (minutes or hours) and when this great pump will occur.
Parabolic after halving?
Birch's prediction sounds more realistic. When the overall trading volume is low, the order book is illiquid, so asset prices can be manipulated. Therefore, Bitcoin holders should prepare for some ugly fluctuations before starting another bull market.
Moreover, the pump Birch predicts may correlate with the third halving, which is the most bullish event for most analysts by May 13, 2020.
You can see the price of BTC here.
Disclaimer: This is not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.