Bitcoin has been in a bearish trend for most of 2023, but according to one on-chain analyst, its Bitcoin’s Next Rally May Be Imminent.
James Check, lead on-chain analyst at Glassnode, says that Bitcoin’s “true cost basis” is sitting at around $32,000. This means that the average Bitcoin investor is currently in profit, and is therefore less likely to sell their coins.
Check also points out that the number of Bitcoin addresses with a non-zero balance has been steadily increasing, even during the bear market. This suggests that there is growing demand for Bitcoin, which could drive prices higher in the future.
In addition, Check notes that the number of Bitcoin transactions has been declining, which could be a sign that investors are accumulating coins in anticipation of a price rise.
Overall, Check’s analysis suggests that Bitcoin is in a good position to rally in the near future.
What is on-chain analysis?
On-chain analysis is the study of Bitcoin transactions and other data stored on the Bitcoin blockchain. On-chain analysts use this data to gain insights into the Bitcoin market and make predictions about its future price movements.
How did James Check calculate Bitcoin’s “true cost basis”?
To calculate Bitcoin’s “true cost basis,” Check and his team removed coins that are lost forever from the calculation and focused on active Bitcoin investors. They then looked at the average price at which these investors bought their coins.
This approach is different from the traditional way of calculating Bitcoin’s average cost basis, which includes all coins in circulation, regardless of whether they are still owned by active investors.
Why is Bitcoin’s “true cost basis” important?
Bitcoin’s “true cost basis” is important because it gives us an idea of the average price at which Bitcoin investors are holding their coins. If the market price of Bitcoin falls below its “true cost basis,” it means that the average investor is in a loss and may be more likely to sell their coins.
On the other hand, if the market price of Bitcoin rises above its “true cost basis,” it means that the average investor is in a profit and may be more likely to hold their coins.
What are other factors that could affect Bitcoin’s price in the near future?
In addition to the factors mentioned by Check, there are a number of other factors that could affect Bitcoin’s price in the near future. These include:
- Macroeconomic conditions: The global economy is currently facing a number of challenges, including high inflation and rising interest rates. These challenges could lead to a decline in risk appetite, which could weigh on Bitcoin’s price.
- Regulatory developments: Governments around the world are still developing regulations for Bitcoin and other cryptocurrencies. These regulations could have a significant impact on Bitcoin’s price, depending on their nature.
- Institutional adoption: Institutional investors are increasingly adopting Bitcoin as a part of their portfolios. This trend could continue in the future, which could drive Bitcoin’s price higher.
- Technological developments: New technologies and applications are being developed all the time for Bitcoin. These developments could make Bitcoin more useful and attractive to users, which could lead to a price increase.
Overall, the outlook for Bitcoin in the near future is mixed. There are a number of factors that could support a price rally, such as Bitcoin’s strong fundamentals and growing institutional adoption. However, there are also some risks to consider, such as the current macroeconomic climate and the possibility of negative regulatory developments.
Investors should carefully consider all of these factors before making any investment decisions.