Last week, Bitcoin (BTC) saw its price jump 6.95% from $ 10,804 on October 5 to $ 11,555 by October 12. The surge was the best-performing week for Bitcoin price since July, and the data shows a noticeable shift in sentiment in the digital good.
According to data from TheTie, an alternative data provider for digital assets, the daily sentiment score for Bitcoin has hit 62.4. The metric measures the tone of conversations on Twitter to infer a positive or negative sentiment in the market, and any value above 50 implies that the market sentiment is positive.
Bitcoin price versus sentiment. Source: TheTie
Bitcoin and the rest of the crypto industry had a fair share of negative press in early October. The CFTC and DOJ took action against the BitMEX exchange, accusing the company of illegally operating a derivatives exchange on October 1, and the UK’s FCA banning cryptocurrency derivatives for retail customers on October 6.
However, none of these events produced the negative results expected by many investors. Additionally, the negative news was followed by bullish stories like Square, in which 1% of its wealth was allocated to Bitcoin.
In general, bullish signs for Bitcoin continue to pile up and as the digital asset rose to $ 11,500, the total market cap of the entire sector rose 6% from $ 339 billion to $ 359.
A recent report that interviewed over 30 panelists, including eToro’s cryptocurrency commentator David Derhy, Alpha5 CEO, Vishal Shah, and LMAX Group’s currency strategist Joel Kruger, found that Bitcoin was worth $ 14,283 by the end of 2020, according to panelists will achieve average.
The blockchain activity matches the mood
Numerous metrics in the chain also match the positive sentiment at Bitcoin. While investor activity has picked up, the price has yet to follow. According to cryptocurrency analyst Willy Woo, this signals an increase in “investor activity” that has not yet been taken into account in the Bitcoin price. Woo said:
The “investor activity” is based on the volume in the chain. This is because when switching BTC between wallets between two different participants it is assumed that an off-chain payment (fiat or alt-coin) has occurred. It is an incomplete measure, but it roughly approximates what is happening. “
Bitcoin NVT (transaction volume versus price). Source: Woodbull.com
Not only has activity increased, the number of coins held on exchanges has also steadily decreased. The changing trend is similar to the accumulation period before the 2017 bull market.
With both fundamental and technical analysis painting a bullish picture amid the current political and financial turmoil, a perfect storm seems to be brewing for Bitcoin.
A strong DeFi rebound is underway
In 2020, DeFi played a key role in reinvigorating the excitement surrounding cryptocurrencies and Ether (ETH) prices. In the past two months, the majority of DeFi tokens have depreciated.
Data from DeFi Pulse shows the total value locked in DeFi is $ 10.89 billion. Uniswap now has a total blocked value of $ 2.6 billion, and trading volume on the decentralized exchange has grown steadily.
Total value locked in DeFi. Source: Digital Assets Data
According to Flipside Crypto, tokens worth around $ 300 million are sent to DeFi-Dapps every day. This outperforms the centralized exchanges which currently have around $ 156 million in daily inflows.
Uniswap alone is currently responsible for 70% of DeFi inflows, with $ 211 million flowing into their liquidity pools every day.
All Ethereum network activities. Source: Flipside Crypto
The growth of DeFi protocols has brought Bitcoin renewed attention, and to date, more than $ 1.1 billion worth of BTC has been marked on the Ethereum blockchain by wrapped BTC alone.
Flipside Crypto found that wBTC and renBTC changed hands in September, valued at around $ 385 million.
There were significant hurdles ahead of us
While many factors point towards an eventful year-end for Bitcoin, it’s worth noting that significant hurdles lie ahead. Historical data shows that Bitcoin has been sold at least three times this year at the $ 12,000 level as miners and whales take profits. If the price approaches the $ 12,000 level again, there is a risk that this will happen a fourth time.
The threat of government action against the decentralized financial sector is also emerging. While a blanket ban on DeFi will be difficult to enforce, centralized domains can be seized and project staff arrested.
Such a scenario could have a devastating impact on Bitcoin’s current bullish mood. Currently, however, traders expect the DeFi to recover. Such an event will likely provide the fuel Bitcoin will need to hit the $ 12,000 level and hit a new high for 2020.