Bitcoin On-Chain Fundamentals Points to “More Room to Grow Imminently” while Low-Cap Altcoins Rallying

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Bitcoin price made its way back above $9,000 yesterday and currently, the digital asset stays above this level. After last week’s sell-off, bitcoin has started to show signs of recovery for the past few days. The stock-to-flow model, however, puts BTC’s value at about $8,646.

Besides the price, the on-chain fundamentals of the bitcoin network are recovering as well. The 7-day moving average of on-chain USD volume although decreased following the drop in price, the absolute values are on par with the volumes we saw a week and month ago.

According to crypto data provider Glassnode, the Reserve Risk of bitcoin, a metric used to assess the confidence of long-term holders relative to price, is at low levels indicating, “high investor confidence in BTC at current price levels.”

Bitcoin- Reserve Risk, Source: Glassnode

The Average Spent Output Lifespan (ASOL) metric also signals “strong investor confidence,” by showing when long-term HODlers exit the market.

Historically, an increase in this metric has come at the same time as the big sell-offs as long-term investors sell their positions. A “significant spike” has also been seen in the past few days but that has been just an exchange aggregating BTC dust from Omni transactions.

Currently, ASOL is at low levels which means long-term investors are not exiting their positions despite the recent dip in its price.

Bitcoin- ASOL (7d Moving Average), Source: Glassnode

Overall, the on-chain fundamental of the bitcoin network suggests the price of the digital has “more room to grow imminently.”

“Is an alt-season about to start?”

Meanwhile, low-cap altcoins are enjoying a surge. Hedera Hashgraph (HBAR) is leading the crypto market with 23.06% gains in the past 24 hours.

Top altcoins are either in loss or barley recording any gains, however, low cap altcoins like Baer Chain (13.18%) Bytecoin (19.35%), Unibright (12.49%), WaykiChain (12.14%), Zilliqa (10.36%), KuCoin (7.99%), Steem (6.44%), Waves (4.65%), Kyber Network (3.04%), Lisk (7.60%), and PundiX (7.50%) are experiencing considerable gains.

Crypto exchange Binance in its February 2020 Crypto Analysis report titled “Is an alt-season about to start?” shares that the big swings in BTC price and its dominance, indicates a “strong month” for altcoins.

The exchange recorded some of the “highest buy flows” in the past few months in both bitcoin and altcoins. Last month, the upswing in altcoin trading resulted in the trading dominance of Bitcoin on Binance falling from 40% to 27%, a level last seen in July 2019.

“If this trend were to continue, it would signify a greater appetite for altcoins from market participants,” said Binance Research.

On Binance Futures, the cumulative volume across altcoin perpetual contacts also surged by 160% while the daily volume across altcoin markets went up about 300% from January, averaging at $1.1 billion.

Additionally, the total open interest (OI) across altcoin perpetual markets grew 76% month-on-month, from USDT 75 million to USDT 133 million.

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