The BFI, which correlates fundamental Bitcoin network metrics with price movements, identified an exhaustion of sellers and an increase in network growth just before the rally. This suggested that the downside risk was limited and that a bounce was on the horizon. Specifically, the BFI had fallen to levels that historically corresponded with the market’s bottom, making it an ideal time for investors to consider entering the market.
On-chain data from the period shows a significant increase in transactions over $100,000, and a steady inflow and outflow on exchanges, indicating a relatively balanced market sentiment. The total inflow to exchanges was around $8.3 billion, with outflows slightly lower at $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 were set to be reaffirmed, contributing to positive sentiment on the cryptocurrency markets. This anticipation played a key role in driving the price upward as investors positioned themselves for potential favorable policies.
The BFI also showed that the concentration by 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 increased volatility. Additionally, the price correlation with Bitcoin remained stable at a score of 1.
This article was originally published on U.Today
Source: Cryptocurrency - investing.com
