Bitcoin Bull Trap? Top Analytics Firms Issue Warning, Says On-Chain Metrics Is Weighing BTC
Prominent crypto analytics firm Santiment warns that many Bitcoin (BTC) chain values should cause bulls to be cautious.
In a new blog post, Santiment says that Bitcoin’s network is not showing the same parabolic growth that it did in the 2021 bull market.
The firm says bull traps occur when prices rise quickly, but the benefit is not, which they say is what happened in Q1 this year.
Santiment takes a look at the amount of activity of unique Bitcoin addresses on the world’s leading blockchain. The firm says that Bitcoin does not have the same growth in addresses as it did in the last bull market.
“Unlike trading volume, the amount of unique addresses interacting on the BTC network has at least increased very mildly. Nevertheless, in previous bull runs, such as the most recent through 2020 and 2021, Bitcoin’s number of unique addresses increased significantly more than that is now Since the beginning of 2023, active addresses have risen +11% while BTC’s price has jumped +65%.
Santiment also looks at Bitcoin’s circulation metric, or the amount of coins moving around each day, and says the metric is currently less bullish now than it was at the beginning of the year when BTC was near $16,000.
“The amount of individual tokens moving per day hasn’t looked as great as the meter’s cousin, address activity. After a temporary uptick in mid-March just as the markets bottomed out, circulation fell back. So much so that unique tokens moving per day (based on a 30-day rolling average) is -6.4% compared to where it was on January 1st, when Bitcoin’s price was just $16.7k.”
The research firm says that while it is possible for Bitcoin to make a comeback, BTC bulls should still keep an eye on the on-chain metrics to see if they show signs of improvement.
“While these differences are not insurmountable, they greatly limit the likelihood that the network will continue to successfully return to the prosperous levels we saw BTC and all of crypto enjoy in October and November 2021.
There are still other important chain signals to pay attention to, such as whale activity and MVRV (market-to-realized-value), which we touch on consistently in many of our other articles. But as far as fundamental metrics that have historically been reliable, you should definitely be looking for on-chain usage conditions to improve if you’re bullish on the crypto markets right now.”
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