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Report: Bitcoin will usher in the biggest breakthrough

A recent report from Coinmetrics stated that the fundamentals of the chain suggest that Bitcoin is experiencing its biggest breakthrough. The report pointed out that after rising by about $1,000 in a day on October 21, Bitcoin has already shown such signs. Digital assets subsequently hit a record high this year.

New precedent

The author of the report admits that it is difficult to predict the future value of Bitcoin due to the notorious volatility, but the author of the report insists that there is a difference between the previous bull market and the current bull market. According to their report, “BTC has grown in a way that did not exist in previous bull markets.”

When explaining their position, the authors pointed out that the relationship between Bitcoin and gold is getting closer, which is one of the reasons why they are bullish. In the report, the author said that Bitcoin has changed after March 12, and throughout history, Bitcoin has had a low correlation with gold and the US dollar.

As the Covid-19 panic spread rapidly, stocks around the world plummeted. Cryptocurrencies fell along with other markets, and both BTC and ETH prices fell by about 50%. Since then, the correlation between BTC and gold has been close to historical highs, while the correlation with the US dollar has been at historical lows.

According to the data, for most of 2020, the correlation between Bitcoin and gold has been positive (above 0), while the correlation between digital assets and the U.S. dollar has remained negative during the same period. It is this growing relationship with gold that makes Bitcoin a form of digital gold.

Companies such as Microstrategy and Square Inc have recently announced acquisitions and subsequently held Bitcoin as a treasury reserve asset.

More Hodler addresses

At the same time, the report also pointed out another important signal, that is, “hold the percentage of supply for at least one year (in other words, the percentage of supply that has not been transferred on the chain as part of the transaction).” According to Coinmetrics, “As of October 25, approximately 62.5% of the total BTC supply has been held for at least 1 year, which is close to the highest level in history.”

As the precedent shows, “During the period when prices have been at local lows, the percentage of supply that has remained unchanged for at least one year has peaked.”

The report adds:

The speed of BTC is also at its lowest level since 2011. “Speed” measures the number of transfers of average supply units last year. High speed means relatively high turnover rate. The rate of decrease shows that BTC tends to be used as a store of value rather than a medium of exchange.

Another indicator that indicates a pending Bitcoin breakthrough is “the number of addresses holding at least $100 in BTC (which hit a record high of $9.74 million on October 22).”

All in all, the report points out that historically, “the price of Bitcoin has reached a local peak within 1.5 years of the previous two halvings.” With the increase in holding activities and the “rear view time shortened by less than six months, All signs indicate that BTC is ready to take off.”

Do you agree with Coinmetrics’ assessment of the imminent outbreak of Bitcoin? Tell us what you think in the comments section below.

Picture Credits: Shutterstock, Pixabay, Wiki Commons

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