Bitcoin Breaks into a New 2020 High as On-Chain Data Signals Start of ‘Main Bull Phase’
Today, bitcoin made yet another 2020 high at around $11,740 as the digital asset jumps another 5% on $2.5 billion. The leading digital asset has started a new month on a green note after ending July, with over 23% positive returns.
A breakout has been already called by the famous Bollinger bands indicator as upper and lower bounds kept on squeezing over time.
“We're at the start of the “main bull phase,” says on-chain analyst Willy Woo noting 365-day on-chain RSI is showing “the compression at the early phase of the bull cycle nearing completion,” which he is expecting to typify the “main bull season run starting Q4 2020 into 2021.”
Moreover, mempool that is unprocessed transactions is spiking with blocks filled to an all-time high. On top of this, active entities are nearing their all-time highs last seen during the 2017 peak.
Already, bitcoin’s uptrend has 95% and still climbing, of BTC in wallets in profit.
Second highest monthly close in $BTC history.
For those of you who find monthly charts useful. pic.twitter.com/PW8Q5HlXgo
— Hsaka (@HsakaTrades) August 1, 2020
Even from a miners’ standpoint, the difficulty ribbon is in compression recovery. “Ribbon compression signals miner capitulation and strong miner HODLing thereafter.”
Given the fact that bitcoin has broken above its psychologically important level of $10,000 and another key level of $10,500, bodes well for the flagship cryptocurrency as we march forward to take over 2019 high of $13,900.
“This week’s pattern suggests to us that the crypto markets aren’t frothy yet and that higher prices await us still,” wrote Juan Villaverde of Weis Crypto ratings. “We usually see the smaller altcoins outperform the broad crypto market once the rally enters its later stages.”
Interestingly despite these moves, BTC/Nasdaq implied volatility has fallen to its lowest point ever. It was back in 2013 and 2014 that bitcoin was extremely volatile, but it has been falling ever since the Mt. Gox hack.
Tech’s the Way
US stocks have also been enjoying a rally, especially the technology sector. Nasdaq 100 outperformed on solid earrings from giants like Apple and Amazon. Microsoft also saw action on a report that it is exploring an acquisition of TikTok's operations in the US amidst President Donald Trump announcing that he is banning the Chinese-owning video-sharing app.
Apple has actually become the world's most valuable traded company with a market valuation of $1.84 trillion after record-breaking Q3 earnings, up 11% from last year, during the coronavirus pandemic. The company also announced a four-for-one stock split, which will lower the price of an individual stock.
“This is further proof that technology is already immune to the virus, and unlike humans, tech and even markets don't necessarily require any sort of vaccination,” said analyst Mati Greenspan.
On Robinhood, Apple is the fifth-most popular stock with almost 600,000 holders, who can buy fractional shares.
Meanwhile, two days after Congress grilled Amazon, the company rallied on strong earnings and plans to expand its real estate footprint by 50% this year. Since March 1, its shares have soared 63%, currently trading above $3,164.
According to UBS analyst Eric Sheridan, Amazon is “checking every box to drive outperformance,” predicting that the price target at $4,000 within the next year.
The S&P 500 also had its fourth consecutive monthly signs, while its correlation with Bitcoin continues to fall, currently at 32.5%.
“With the impact of past stimulus measures fading and given some evidence that the global recovery has already stalled, it remains to be seen what will help keep global stock markets elevated in the coming months, especially U.S. stocks,” said Fawad Razaqzada, a market analyst at ThinkMarkets.
There is a risk of a correction this month, but it might not be as severe as the one in March, because of the improved condition overall that could also translate into a small correction in BTC price.