Bitcoin Price Might See 'Regression Into Bearish Territory', Glassnode Data Shows

News
Tue, 05/26/2020 - 06:59
Alex Dovbnya
Bitcoin might enter the bearish territory due to declining on-chain fundamentals, Glassnode data shows
Cover image via stock.adobe.com
Contents

Data provided by Glassnode shows that Bitcoin, the leading cryptocurrency by market cap, could enter bearish territory if its fundamentals don’t improve in the nearest future. 

The GNI index, which describes the overall state of the Bitcoin blockchain, has slipped to 60 this week. 

This represents a 17.8 percent week-over-week decrease, which also coincided with the BTC price dropping below the $9,000 level.

Related
Here's Why and When Fundstrat Expects Bitcoin Price to Hit $17K

Weakening fundamentals 

While the price of Bitcoin can certainly deviate from its fundamentals, increasing on-chain activity is inextricably linked to a sustained bull run. Vice versa, the asset’s price momentum tends to wane in tandem with declining blockchain measurements. 

The above-mentioned index takes into account such metrics as network health, liquidity, and sentiment in order to determine how strong Bitcoin’s fundamentals are.

image by insights.glassnode.com

All three of these values have declined with sentiment taking the biggest hit out of them (a 20 point decline). Glassnode attributes this to the trifecta of decreasing economic activity, the latest BTC price dip, and slowing accumulation.

Related
Billionaire Tim Draper Says Bitcoin (BTC) Is Going to Transform Banking: Watch Video

Bears in control?

The GNI compass, which combines on-chain fundamentals with the prevalent price trend, makes it easier for traders and investors to determine where Bitcoin is headed next.    

Glassnode predicts that Bitcoin could dip into the bearish territory if fundamentals do not improve in the next few weeks.

As of now, the bulls don’t seem to be ready to re-test the $10,000 anytime soon, and the recent drop to $8,700 could inflict even more pain.

However, the firm also points out that such periods of bearishness was supposed to be expected after the third supply cut that happened earlier this May.

In 2016, BTC dropped roughly 30 percent in less than a month after its second 50 percent reward reduction in July 2016. 

Subscribe to U.Today on Twitter and get involved in all top daily crypto news, stories and price predictions!

About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets, can be contacted at alex.dovbnya@u.today.

This site uses cookies for different purposes. Please set your preferences in Cookie Settings and visit our Cookie policy for more information on how and why cookies are used on this site. Click here for cookie policy