The recent bounce in Bitcoin price from around $60,000 on May 1 to $65,000 on May 6 was not a surprise to those familiar with the Bitcoin Fundamental Index (BFI) provided by Swissblock. This innovative tool accurately predicted the increase, pointing to a investment.
The recent bounce in Bitcoin price from around $60,000 on May 1 to $65,000 on May 6 was not a surprise to those familiar with the Bitcoin Fundamental Index (BFI) provided by Swissblock. This innovative tool accurately predicted the increase, pointing to a investment.
The BFI, which correlates fundamental metrics of the Bitcoin network with price movements, identified seller exhaustion and an increase in network growth just before the rally. This suggested that downside risk was limited and a rebound was on the horizon. Specifically, the BFI had fallen to levels that historically corresponded with the market bottom, making it an ideal time for investors to consider entering the market.
On-chain data for the period shows a significant increase in transactions over $100,000 and a steady inflow and outflow on exchanges, indicating relatively balanced market sentiment. Total inflows to the exchanges were around $8.3 billion, with slightly lower outflows of $7.23 billion, suggesting that while some investors took profits, there was substantial buying pressure to sustain the rally.
Ahead of the Federal Open Market Committee (FOMC) meeting, liquidity expectations reaffirmed, contributing to positive sentiment in cryptocurrency markets. This anticipation played a key role in driving the price higher as investors positioned themselves for possible favorable policies.
The BFI also showed that the concentration of large holders was relatively low at 11%, indicating that the recent price movement was not primarily driven by the activities of whales, which can often lead to higher volatility. Furthermore, the price correlation with Bitcoin remained stable with a score of 1.
