Why is Bitcoin Price Rising? Here are 5 Developments That Triggered the Rally
The idea is based on various factors such as the famous stock-flow model, the increasing hodl mentality of investors and the issuance of new cryptocurrencies.
Weekly and Monthly Bull Patterns
According to Nicholas Merten, the person behind the popular DataDash YouTube channel, Bitcoin’s latest performance strengthens an upcoming bull run. This rise began in December 2017, examining a resistance level of about three years starting from the all-time highs.BTC has not been able to overcome this resistance in the weekly chart since then, but this week it did so. Merten called it “a big moment for Bitcoin”. “We are in an upward trend, even in a weekly time frame,” emphasized.
Merten also observed an even higher time frame on the monthly chart. He argued that, as the majority believed, Bitcoin did not move in a four-year cycle between each half. Instead, the asset’s price follows expanding cycles.
The first cycle of this kind took place in 2010: “real price data, real volume, and the first major exchanges began to list Bitcoin”. This situation lasted eleven months. However, every subsequent cycle added about a year (11-13 months), which further pushed the BTC price further. So this approach was called expansion cycles.The second started in October 2011 and ended in November 2013, and the third ended in December 2017, BTC reached the all-time high of $ 20,000. The cycle that Bitcoin is currently in began at the end of the bear market in 2019. Estimated time to complete “somewhere around November 2022.”
“If we look at the logarithmic scheme when we have the line resistance that curls over time, there is roughly a large figure of around $ 100,000,” says Merten.
Merten also touched upon the famous stock flow model. While the stock represents the size of existing stocks (or reserves), the flow is the annual BTC supply in the market. As the roughly four-year halfway halves the creation of new bitcoins, BTC’s stock / flow rate estimates that the asset price can indeed rise to $ 100,000 per cryptocurrency in a few years.
After the third half of May, many began to criticize the model, as the price of BTC did not react immediately. Merten, however, has historically stated that the entity sometimes bounced months or even years after the event.
“Looking at the previous halves, we can see that we actually received more delayed responses. During the previous cycle, according to the stock-flow model, when the price rose above the red line after 2017 – after November 2017, the fair value of Bitcoin was revealed. ”
Bitcoin Holders for a Long Time (HODLs)
The increasing HODLing mentality of Bitcoin investors is another indicator that can suggest the BTC price increase. The 1+ year HODL wave, which tracks the number of bitcoins that have been inactive for at least a year, is at an all-time high, as the graph below shows.
More specifically, 62% of all bitcoins have not moved for a year or more. Merten emphasized the importance of this for the price, because it implies that people hold more of their money than they actually spend or sell.
“As more and more people, for example, Grayscale or other different corporate players start getting more bitcoins, it is getting to the point where there isn’t a lot of Bitcoin liquidity in the market.”
Puell Multiple Metric
According to Merten, Puell Multiple Metric estimates price tops and bottoms quite accurately. Now that he is in a relatively low position, he can be sure that BTC is now below its value.
After all, all these factors support the narrative that Bitcoin is really heading for an important bull run.
“As the price continues to reach higher levels, as a result of a drop in the current Bitcoin supply due to the halfway event, and more and more people are beginning to hold on to Bitcoin, there are very strong cycles with huge levels in the price of BTC.”