Here’s Real Reason Why Bitcoin Price Remains in Limbo

News
Mon, 07/20/2020 - 06:07
Alex Dovbnya
Bitcoin failing to see an uptick in the value transferred on its network is good news for the bears
Cover image via stock.adobe.com
Contents

Crypto analytics firm Santiment has noticed a “concerning” lack of token circulation on the Bitcoin network, according to its latest tweet:

"Our $BTC NVT Divergence Model continues to show a concerning lack of token circulation. Prices tend to move upward when unique token movement of an asset rises."

Altcoins, many of which had quite a wild run over the past few weeks, are stealing Bitcoin’s luster.

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A bearish divergence

Santiment’s NVT divergence model shows the correlation between the Bitcoin price and the asset’s NVT (network value to transaction ratio). 

NVT is calculated by dividing the total value of the whole Bitcoin network by the daily transaction value. 

If token circulation is too low relative to Bitcoin’s market cap, it means that the cryptocurrency is overpriced (and vice versa).         

The Santiment chart is currently showing a bearish divergence at the $9,200 range, meaning that a potential uptrend could be in store. 

image by @santimentfeed

Notably, it signaled a bullish divergence about one month ago when the BTC price was sitting at exactly the same level.

Bitcoin’s 10-day realized volatility recently approached a two-year low after two weeks of range-bound trading.         
 

Altcoins are to blame

Bitcoin’s subdued price action coincided with the explosive growth of some altcoins that are eating the king’s lunch.

Last week, Chainlink (LINK) reached a new all-time high of $8.50 after an 80 percent price rally. 

Cardano (ADA) continues to firmly hold to its sixth place, with its market cap being on track to surpass Bitcoin Cash (BCH).   
On July 17, Stellar (XLM) also decoupled from Bitcoin following the news about its blockchain being supported by Samsung Galaxy phones.

Bitcoin’s dominance has slipped below 61 percent, its lowest level since mid-February.

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.


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