Bitcoin [BTC]: Will increasing tarot adoption drive up prices?
- Bitcoin Taproot adoption boomed as there was a 5% increase.
- Miners faced the heat as selling pressure increased.
The latest rise in Bitcoin [BTC] Adoption of tapioca gave hope to the holders. Notably, on February 9th, Bitcoin’s Taproot usage rate had passed 5%. This increase in taproot adoption, combined with other key figures, suggested a positive outlook for Bitcoin.
Bitcoin Taproot adoption has broken 5% for the first time ever👀 pic.twitter.com/lxezIbkObj
— Will Clemente (@WClementeIII) 8 February 2023
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Taproot is an upgrade to improve the privacy, scalability and security of Bitcoin. It introduced new signature schemes and a flexible transaction structure, making transactions more efficient and private. The growing use of Bitcoin Taproot could improve the possibility that BTC will soon increase its presence.
Another positive for Bitcoin during this period was the number of non-zero addresses on the Bitcoin network. These addresses reached an all-time high of 43.8 million, according to data provided by Glassnode. The high number of active addresses suggested that more people were using and holding Bitcoin.
Source: Glassnode
A decrease in sales pressure was also observed.
According to data from CryptoQuant, currency reserves have declined over the past week. The decline in foreign exchange reserves indicated lower selling pressure, which was a positive sign for the market.
However, one factor that could increase the selling pressure was the behavior of the miner. Miners could sell their holdings if they faced declining balances and reduced income. According to Glassnode’s data, mining balances dropped significantly in the past month, hitting a one-month low of 1.8 million at press time.
📉 #Bitcoin $BTC Miners’ Balance just hit a one-month low of 1,822,891,794
The previous 1-month low of 1,823,291,941 was observed on January 23, 2023
See calculation: pic.twitter.com/8St5jRDkr9
— glassnode alerts (@glassnodealerts) 9 February 2023
Looking at chain
If miner income continued to fall, miners would be forced to sell their BTC to be profitable. Another factor that will increase the selling pressure on miners will be the declining revenues they generate.
Source: Glassnode
However, the declining MVRV ratio of Bitcoin suggested that BTC holders will not be selling their positions anytime soon. A decline in the MVRV ratio suggested that fewer BTC holders could make money if they sold their positions.
Although most addresses holding BTC are short-term investors, as indicated by the negative long/short ratio, it appeared that all investors were willing to wait to sell their holdings for a profit.
Source: Sentiment
How much is 1,10,100 BTC worth today?
During this period, open interest in Bitcoin also increased. As open interest increased, it indicated more liquidity and attention to the Bitcoin derivatives market. However, increased open interest also brought with it additional volatility.
Source: Crypto Quant
With factors both for and against it, only time will tell which direction BTC will go in the future.
