The recent surge in Bitcoin‘s value, climbing from approximately $60,000 on May 1 to $65,000 by May 6, didn’t catch experts off guard, thanks to insights provided by the Bitcoin Fundamental Index (BFI) from Swissblock. This innovative tool accurately predicted the upturn, marking a notable reversal in market trends.
The BFI, which analyzes fundamental metrics of the Bitcoin network alongside price fluctuations, highlighted a diminishing presence of sellers coupled with a rise in network expansion just before the rally. This observation suggested a limited downside risk and hinted at an impending market recovery. Notably, the BFI had descended to levels historically associated with market bottoms, presenting an opportune moment for potential investors to consider market entry.
Examining on-chain data from the period reveals a substantial uptick in transactions exceeding $100,000, alongside consistent inflows and outflows on exchanges, signaling a relatively balanced market sentiment. Total inflows to exchanges totaled approximately $8.3 billion, with slightly lower outflows at $7.23 billion, indicating a scenario where some investors capitalized on profits, counterbalanced by significant buying pressure sustaining the rally.
Anticipation surrounding the Federal Open Market Committee (FOMC) meeting underscored expectations of liquidity reaffirmation, fostering positive sentiment within cryptocurrency markets. This pre-event optimism significantly contributed to the upward trajectory of Bitcoin’s price, with investors strategically positioning themselves to leverage potential favorable policy outcomes.
Furthermore, insights from the BFI indicated a relatively low concentration among large holders, standing at 11%. This suggests that the recent price surge was not predominantly driven by the activities of whales, mitigating potential volatility often associated with such market actors. Moreover, Bitcoin’s price correlation remained stable, maintaining a score of 1 throughout the observed period.
