• 29 May, 2024
Market News

Bitcoin’s Bull Run in Danger: Santiment Warns of Stagnating Utility

Latest reports suggest that volume, circulation, and address activity are crucial indicators to consider before the next bull run in Bitcoin. It is indicated that the ongoing battle between bulls and bears is determining whether the cryptocurrency would drop to $25k or revisit $30k.

Santiment, a behavior analytics platform for cryptocurrencies, has warned that Bitcoin’s recent bull run may not be sustainable due to stagnating on-chain utility, and traders should monitor usage metrics closely to avoid falling into the next bull trap.

Bitcoin’s recent bull run may be short-lived due to poor utility growth. See the latest insights from Santiment on trading volume, daily active addresses, and circulation:

In the past, price rallies without a corresponding increase in address and coin usage have been short-lived. Many traders fall into the bull trap of buying into the inflating market caps, only to be blindsided when the rally grinds to a sudden halt. Such was the case with the 3-month pump at the beginning of 2023.

After peaking during Bitcoin’s initial rise above $25k in March, the trading volume quickly dropped. Unique addresses interacting on the BTC network have only slightly increased, whereas previous bull runs saw a considerable jump. The number of individual tokens being moved daily has also been lackluster, with a -6.4% decline since January 1st.

To further illustrate BTC’s deficit in circulation, Santiment’s NVT Sansheets model shows a concerning bearish divergence. While these divergences are not impossible to overcome, they greatly limit the likelihood of the network returning to its previous prosperous levels.

While there are other vital on-chain signals to consider, such as whale activity and MVRV, on-chain utility conditions must improve for those bullish on the crypto markets. As Bitcoin continues its volatile journey, traders would do well to monitor usage metrics and not get caught in the next bull trap.

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