Bitcoin Moves: BTC Volatility, Network Metrics, & News

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Bitcoin Moves: BTC Volatility, Network Metrics, & News

The price of Bitcoin has reached levels not seen since June 2019, topping out at USD $12,117 on August 1st and surpassing the year’s previously tested high seen before the March 12th sell off. Bitcoin’s market cap has also surged to a new 2020 high at USD ~$208 billion. As the state of the US economy wavers and the Fed continues to print US dollars, it appears that investors view Bitcoin, with its decentralized network and limited supply, as a strong hedge to fiat inflation. 

Here’s your market snapshot: 

Bitcoin price movements 

  • Current Bitcoin price: USD $11,208, up ~2% from last week (USD $10,959)
  • 24hr high: USD $11,442
  • 24hr low: USD $11,013
  • 24hr change: +4%
  • 24 hr BTC volume sits around USD $22 billion, down 39% from last week (USD $36 billion)
  • 30 day high / low: USD $12,034 / $9,058
  • 90 day high / low: USD $12,034 / $8,374
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BTC volatility

The price of Bitcoin reached a level on August 1st not seen since June of 2019 when BTC soared past $12,000 to top out at just over USD $13,000. On Saturday, Bitcoin hit USD $12,117 just before pulling back into a sharp correction. Bitcoin volatility increased 33% over last week.

USD $12,000 has been a historically relevant resistance level, with $11,500-$12,000 acting as a “hard resistance zone for over two years, since 2018,” reported Cointelegraph. “Every attempt to break out of the range has led to a prolonged correction.” However, the bounce back to USD $11,400 and settling at $11,200 after dipping to $10,800 over the weekend appears to be a good sign.

Some speculators have suggested that Bitcoin doesn’t have enough liquidity in its various markets due to a function of its limited supply by design. Given the flash-crash nature of the drop it’s likely that as the price moved up, short sellers came in and forced the price down on a thin market causing a series of liquidations to occur. Without enough support to limit the correction, liquidity collapsed, causing a cliff-like drop in price.

Cointelegraph also noted that “the shocking short-term price action caused $1 billion worth of liquidations in futures contracts for Bitcoin (BTC) and Ethereum’s native token, Ether (ETH).” 

Network stats 

Bitcoin usage metrics are increasing, possibly pointing to evidence of a mounting bull market. 

In Coin Metrics most recent State of the Network newsletter, they shared a chart showing the growth in several cryptocurrency network metrics: 

As noted above, Bitcoin daily active addresses have increased by 2% over the past week to over one million, a number not seen since January 2018. Monthly active addresses (MAA) presently sit around 844,000.

The present network value to transactions ratio (NVT) appears low, potentially signaling a market opportunity, seen below.

Coin Metrics also noted that BTC daily average transaction fees have grown 67.4% week-over-week, while daily transaction volume has increased 26% over last week, from 264.76k to 333.59k.

Bitcoin and gold correlation

As the value of the dollar continues to decrease, precious metals and other commodities continue to rally, with the price of gold today hitting an all time high at over USD $2000 per troy ounce. The Wall Street Journal reported that “the precious metal has soared roughly 30% in 2020.”

As the Fed looks to maintain interest rates, potentially increasing inflation, it’s likely that investors are looking to Bitcoin and gold as a hedge against fiat inflation. Pantera Capital noted in a recent blog post that in June, the Fed printed more money than in the last two centuries.

Bitcoin-S&P correlation has decreased, while the correlation between Bitcoin and gold has increased quite significantly, seen below. 

In the news 

Fed loosening monetary policy?

The Wall Street Journal reports that the Federal Reserve is preparing to loosen its monetary policy, maintaining a 0.25% interest rate instead of lifting rates in order to keep inflation down. Coindesk notes that this may be good for Bitcoin, explaining that “the Fed’s extra loosening of monetary policy could help support prices for bitcoin, which many cryptocurrency investors speculate could serve as an effective hedge against inflation, similar to gold.”

Electric Capital raises $110M from universities 

Bloomberg explains that San Francisco-based fund, Electric Capital, has raised the fund to give university endowments and other non-profits exposure to cryptocurrencies and digital assets.

Congressman says Bitcoin will become stronger after pandemic

United States Representative Tom Emmer (R-MN) says that Bitcoin will only be getting stronger after the world eventually emerges from the economic chaos caused by the coronavirus, as reported by Cointelegraph.

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