Social sentiment data, strong fundamentals, and on-chain analysis show Bitcoin is on the verge of a 2017 bull run.
Last week, Bitcoin saw a 6.95% increase in price, up from $ 10,804 on October 5 to $ 11,555 on October 12. The surge marks the best performing week for Bitcoin since July, and the data shows notable changes in market sentiment around the digital asset.
According to data from The Tie, an alternative data provider for digital assets, the daily sentiment score for Bitcoin has reached 62.4. The metrics of Twitter chats to determine positive or negative sentiment in the market and any point above 50 imply that market sentiment is positive.
Bitcoin and the rest of the crypto industry endured a huge amount of negative news in early October. CFTC and DOJ cracked down on BitMEX, accusing the company of running the derivative exchange. was illegal on October 1, and the UK FCA banned retail cryptocurrency derivatives on October 6.
However, neither of these events produced negative results as many investors thought. Furthermore, negative news is followed by upbeat stories like Square allocating 1% of its assets to Bitcoin.
Overall, bullish signs continued to come for Bitcoin, and as it rose to $ 11,500, total market cap jumped 6% from $ 339 billion to $ 359.
Furthermore, a recent Finder report surveying more than 30 panelists, including eToro commentator David Derhy, CEO of Alpha5, Vishal Shah and LMAX Group currency strategist Joel Kruger, found that Bitcoin will reach $ 14,283 by the end of 2020.
Blockchain activity is emotional
Many on-chain metrics also fit in with the positive sentiment surrounding Bitcoin. While investor activity is on the rise, prices have yet to follow. According to crypto analyst Willy Woo, this signals an increase in “investor activity”, an activity that has not yet been counted towards the price of Bitcoin. Woo said:
” Investor activity “is determined based on on-chain volume. This is because as Bitcoin moves between wallets of two different participants, we assume that there is already an off-chain payment (fiat or alt-coin). It is an imperfect measure, but close to what’s going on.
NVT Bitcoin (Transaction volume vs. price) | Source: Woodbull.com
Not only is activity increasing, but the number of coins held on exchanges is steadily decreasing, the trend changing like the accumulation period that occurred before the bull market of 2017.
As both fundamental and technical analysis paint a bullish picture amid current political and financial volatility, a perfect storm appears to be accumulating for Bitcoin.
DeFi is slowly recovering
By 2020, DeFi will play a key role in reviving the excitement surrounding cryptocurrencies and ETH price. But in the past two months, the majority of DeFi tokens have lost value.
Data from DeFi Pulse shows that the total value locked up in DeFi is $ 11.33 billion. Meanwhile, Uniswap has a total value of $ 2.7 billion locked and decentralized exchange (DEX) has continued to see a steady increase in trading volume.
Total locked values in DeFi | Source: Digital Assets Data
According to data from Flipside Crypto, around $ 300 million in tokens are being sent to DeFi dapps every day. This is far ahead of centralized exchanges (CEX) that are currently seeing daily cash flows of around $ 156 million.
Uniswap alone is currently responsible for 70% of DeFi cash flow, with $ 211 million going to their liquidity pool each day.
All activities of the Ethereum network | Source: Flipside Crypto
The development of DeFi protocols has brought new attention to Bitcoin, and so far, more than $ 1.1 billion worth of Bitcoin has been encrypted on the Ethereum blockchain only through Wrapped BTC (WBTC).
Flipside Crypto notes that around $ 385 million wBTC and renBTC changed hands in September.
Significant hurdles are ahead
While many factors move toward an eventful year-end for Bitcoin, it should be noted that significant hurdles are ahead. Historical data shows that Bitcoin has sold off at $ 12,000 at least three times this year as miners and whales take profits. With the price approaching $ 12,000 again, there’s the risk of this happening for the fourth time.
There is also a looming specter of regulatory crackdowns against the Defi realm. Although a mass ban on DeFi would be difficult to enforce, centralized domains could be seized and project staff could be arrested.
Such a scenario could have a serious impact on Bitcoin’s current bullish sentiment, but for now, traders are expecting DeFi’s rebound. Such an event is likely to provide the fuel Bitcoin needs to push past $ 12,000 and reach new highs in 2020.