The consolidating Bitcoin market was shaken with a mention of Elon Musk on Friday. Shortly after the 20% appreciation, however, the price reversed and fell almost to the level before the pump. Despite the wild market movement, BTC’s on-chain metrics stayed strong.
The Bitcoin network has been active and processing the second largest number of transactions. The number of transactions has increased 204% since the beginning of 2020, which indicates that the active users on the network are using BTC. While the transfer value in the chain reached its all-time high in early 2021. In the graph below, this peak and the subsequent drop immediately after it has been highlighted. However, very few of the Bitcoin in circulation appeared on exchanges.
According to a report by Nate Maddrey, a researcher at CoinMetrics, only 15% of bitcoins were sent to the exchanges in early 2021. Compared to 45% during the peak of the 2017 bull run, user attitudes have changed and the crypto space has seen interest from institutions. The participating institutions that buy BTC through OTC desks and platforms outside the major exchanges could be a reason for the surge in transfers in the chain. Still, it was also a sign of retail interest in the Bitcoin railing.
Regardless of the instability in the Bitcoin market on January 29th, the altcoins Ethereum, Polkadot and others remained briefly affected. The second largest digital asset, along with altcoins, more or less stuck to its price, and this indicated that altcoin traders may be ready for further price tracking.
After observing from the Santiment Feed:
Although Bitcoin is currently experiencing spurts of growth, there is speculation that the rally will continue. In the meantime, however, alts may take power due to their resistance to a volatile period.
Among the top alts, Polkadot led the way, with the highest value, and as one of the most secure PoS platforms. Due to its massive spike in 2021, the project has received a lot of recognition this year. On Thursday, Grayscale added DOT to its list of trusts, including other alts like Monero [XMR], Cardano [ADA]Aave [AAVE], Cosmos [ATOM]and EOS [EOS].
Given that the alts are following Bitcoin and gaining strength, this positive momentum in the crypto market can cause altcoins to rebound as BTC levels off.