Multiple data points suggest Bitcoin’s 2017-style bull run has begun
Last week, Bitcoin (BTC) saw its price rise 6.95%, rising from $10,804 on October 5 to $11,555 by October 12. The surge marked the best performing week for the price of Bitcoin since July and data show a noticeable shift in market sentiment around the digital asset.
According to data from TheTie, an alternative data provider for digital assets, the daily sentiment score for Bitcoin has reached 62.4. The metric measures the tone of conversations in Twitter to derive positive or negative sentiment in the market, and any score above 50 implies that market sentiment is positive.
Generally, bullish signs continue to pile up for Bitcoin and as the digital asset rallied to $11,500, the total market capitalization of the entire sector increased by 6% from $339 billion to $359.
Furthermore, a recent report surveying over 30 panelists, including eToro’s cryptocurrency commentator David Derhy, Alpha5 CEO, Vishal Shah, and LMAX Group currency strategist, Joel Kruger, found that Bitcoin is set to hit $14,283 by the end of 2020, according to the panelist average.
Blockchain activity matches sentiment
Numerous on-chain metrics also match the positive sentiment around Bitcoin. While investor activity has been picking up, the price has yet to follow. According to cryptocurrency analyst, Willy Woo, this signals an increase in “investor activity”, one that has yet to be accounted for in the price of Bitcoin. Woo said:
“Investor activity” is predicated on on-chain volume. This is because when BTC moves between wallets between two different participants, we assume there was a payment for it off-chain (fiat or alt-coin). It’s an imperfect measure but approximates what’s going on.”
Bitcoin NVT (Transaction volume vs price). Source: Woodbull.com
Data from DeFi Pulse shows that the total value locked in DeFi is at $10.89 billion. Meanwhile, Uniswap has $2.6 billion in total value locked and the decentralized exchange has continued to see a steady increase in trading volume.
According to data from Flipside Crypto, around $300 million worth of tokens are being sent to DeFi dapps every day. This is outpacing centralized exchanges which currently see a daily inflow of around $156 million.
Uniswap alone is currently responsible for 70% of the DeFi inflow, with $211 million going to their liquidity pools every day.
All Ethereum network activity. Source: Flipside Crypto
The growth of DeFi protocols has brought renewed attention to Bitcoin and to date more than $1.1 billion worth of BTC has been tokenized on the Ethereum blockchain through Wrapped BTC alone.
Flipside Crypto noted that roughly $385 million worth of wBTC and renBTC changed hands in September.
Significant hurdles lay ahead
While many factors point towards an eventful end of the year for Bitcoin, it’s worth noting that significant hurdles are ahead. Historical data shows Bitcoin has sold off at the $12,000 level at least three times this year as miners and whales take profit. With the price again approaching the $12K level, there’s the risk of this happening a fourth time.