Bitcoin is poised to break the $30,000 mark for the first time since June 2022, and indicators on and off-chain are under scrutiny. Crypto market intelligence platform Santiment analyzed how Bitcoin’s latest price movements have affected the asset and noted an increase in social volume and dominance compared to other cryptocurrencies.
Bitcoin’s Dominance Returns
According to a blog post by Santiment on Thursday, Bitcoin’s Social Volume and Social Dominance have now risen to their highest levels in a year. Social Dominance refers to the share of crypto media discussions that mention Bitcoin, while Social Volume measures the number of text documents that reference the asset, including Telegram messages and Reddit posts.
Both metrics increased as Bitcoin surged back above $25,000 earlier this month after the Federal Reserve agreed to bail out all depositors to Silicon Valley Bank (SVB). Market excitement is back on the rise, with Crypto’s fear and greed index reaching a “greed” score of 63 as of Friday. However, Santiment cautioned against overexcitement, stating that such fervor “usually indicates a local top.” Additionally, it called attention to Bitcoin’s trading volume, which, although robust during its recent run-up to $27,000, has since dropped, setting a divergence from its price.
“Now we are observing a divergence in Price and Volume, which usually isn’t a good thing as it is signaling that there’s exhaustion in the price action,” wrote Santiment.
Old Coins On the Move
Since mid-March, Santiment’s research has found an increase in movement among “dormant coins” – Bitcoin transaction outputs that haven’t moved for the past five years. Each spike involved between 2,800 and 3,000 BTC, which Santiment believes demonstrates that a particular whale is “jittery” about recent price action. The US government claimed in a memo on Friday that it had sold over $200 million worth of its Silk Road Bitcoin holdings on March 14th. Santiment posits that such movements could be related to the CFTC’s recent lawsuit against Binance or other crypto-related crackdowns. The firm’s MVRV-Long/Short Difference metric reveals that long-term holders at current price levels are beginning to show greater unrealized profits than short-term holders. This reversal indicates a pattern similar to that of 2019.
“If history is to repeat itself, then, we might just see a sharp spike marking a local top and a dreadful bleedout like 2019,” wrote the firm.