In recent weeks, the price of Bitcoin (BTC) has re-emerged after months of apparent currency stagnation. Since July 23, the value of a single Bitcoin has increased about 20%. Not only that, having traded sideways since its supply cut in early May, The major currency broke its all-important psychological threshold of $ 10,000, prompting many casual investors to jump back on the cryptocurrency train.
Bitcoin’s recent price spike has also led to a boom in retail, with a whole host of trading platforms around the world that inform of soaring Bitcoin trading volumes. As a result of this bullish market activity, Joe DiPasquale, leading cryptocurrency expert and CEO of BitBull Capital, recently stated that this latest surge is once again creating an element of FOMO, which stands for “fear of missing out” and it could be translated into Spanish as fear of missing the opportunity, among occasional investors who believe they may be late for the cryptocurrency party.
Echoing a somewhat similar sentiment, Joshua Frank, co-founder and CEO of The Tie – a provider of data aggregation tools – commented to Cointelegraph that historically speaking, lVolatility has fueled significant new waves of interest and investors in Bitcoin, particularly with the most recent of $ 9,000 to $ 12,000. Frank highlighted that the 30-day average number of Twitter users talking about Bitcoin has increased from 24,000 to 30,000 in the last two weeks, adding:
“Bitcoin reached its highest daily tweet volume level since June 26, 2019 following the Twitter hack on July 16. While it is not clear that the prior period had any correlation with the hack, we have seen in the past that All things being equal, 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 that Since volatility increased, his company has seen trading volumes skyrocket 40% from where the summer daily averages were before this recent rally.
Major cryptocurrencies are mobilizing rapidly
Cointelegraph also discussed the recent market action with Adam Vettese, a market analyst at forex trading and investment platform eToro. He pointed out that since cryptocurrency prices began to rise in late July, the number of crypto positions that were opened increased 115% over the previous fortnight. During the same period, the trading volume 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, director of sales for digital asset trading platform CrossTower also stated that over the course of the past few weeks his company has observed a 219% increase in daily trading volume, as well as a 66% increase in the number of daily average registrations during the same time period.
Michot also noted that since the mid-March pullback, the market as a whole has seen a strong bullish pullback. For example, Bitcoin has recovered over 210% and Ethereum has bounced 364% since the “Black Thursday” crash of March 11, 2020.
The rally in the crypto market has come after positive news such as the recent clarification from the US OCC that allows banks to hold Bitcoin, as well as the announcement of another stimulus package that the Federal Reserve will issue in a near future, which some experts believe will continue to devalue the US dollar.
People’s sentiment towards cryptocurrencies is skyrocketing
On July 12, Bitcoin’s long-term sentiment score – 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 rise at the end of the month. Similarly, The daily sentiment score represents a measure of how positive or negative Twitter conversations have been about a particular currency in the last 24 hours versus the previous 20 days.
The Daily Investor Sentiment Score has remained positive (above 50) every day from July 20 to August 1. Even after Bitcoin failed to break the $ 12,000 mark and fell back $ 1,400, investor sentiment fell below 50 for just about 28 hours, alluding to the fact that investors have remained extremely positive on Bitcoin.
Frank told Cointelegraph that about 68% of all tweets talking about Bitcoin’s long-term financial future over the past month have been positive. Similarly, Michot added that according to CrossTower media data, the market is in the early stages of a new bull run, adding: “Another positive sentiment comes from family offices and other traditional counseling firms. These companies are seeing increased demands from clients seeking exposure to cryptocurrency markets.“.
Other crypto-related offerings are also flying high
Since the beginning of the recent crypto surge, there has been a spike in the use of stablecoins along with a clear increase in demand for other DeFi- related tokens.. John Todaro, director of institutional research at TradeBlock, a trading platform for institutional investors, told Cointelegraph:
“Stablecoin’s circulating supplies have risen substantially in the last 6 months, with Tether seeing around $ 10 billion in deposits and USDC seeing over $ 1 billion. This may seem small, but those deposits make Circle and Tether, to some extent, are de facto banks with sizable customer deposits. $ 5-10 billion in customer deposits is equivalent to a small or medium commercial bank in the US. “
Todaro added that while adoption by traders remains limited in the case of stablecoins, There is a real demand for these assets in developing economies, as well as those with political instability, such as Latin America, parts of the Middle East and, to some extent, Hong Kong. He also noted that derivatives volumes have increased recently (in Deribit, CME and others), but a large part of it is linked to price action, as increased volatility almost always tends to drive higher prices. trading volumes.
Vinokourov believes that the recent period of low volatility and low trading volumes has turned into one of the busiest periods for digital assets in recent memory: “Spot volumes and derivatives venues spiked as Bitcoin traded over $ 11,000, and other big-cap assets followed suitVinokourov further opined:
“Particular attention should be paid to the evolution of Ethereum’s volatility profile which, despite having recently peaked, is still elevated relative to Bitcoin. This suggests greater 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 the metric can suggest a possible price direction. Presenting your views on the matter, Todaro opined that the index is calculated based on a few variables that, to some extent, are affected by price, forcing the index to track certain elements such as the speed of price gains, high prices of all timing and price momentum, among other parameters.
For example, if there is a large drop in the market, volatility will increase and the index will conclude that the market is very fearful. By doing so, the index eventually follows the price. Additionally, the index captures Google trends, with a high interest in positive cryptocurrency terms signifying high greed. Thus, Todaro believes that the index can be used to make current and future investment decisions.:
“Although the price of Bitcoin has not returned to the all-time highs, this was the fastest price gain in a 10-day period in its history, which would read as extremely greedy, so perhaps it is time to sell. and wait for a rollback to come back in. “
Another correlation worth exploring is that between Bitcoin and the S&P 500. According to Quantum Economics founder Mati Greenspan, the previously high correlation between cryptocurrencies and the S&P 500 has declined:
“We can clearly see earlier this year where the correlation rose to 0.6 due to the anticipated sale of multiple assets by the pandemic. However, now we are back below 0.2, which basically means that already there is no correlation on a day-to-day basis. “
Furthermore, Greenspan noted that even a 0.6 peak only represents a very weak correlation, adding: “Many stocks have a very high correlation with each other, usually above 0.8, even if they are in completely different industries, and many altcoins are similar.“.