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Report: Small price change in Bitcoin could trigger a bull market

Report: Small price change in Bitcoin could trigger a bull market

The latest Coin Metrics report found that about 72 percent of all Bitcoin in circulation now has unrealized gains. The huge rise from December’s 50 percent shows that the vast majority of Bitcoin has an estimated cost basis of less than $12,000. At these levels, only a small price increase could trigger a bull market, the report found.

The crypto market sees significant improvements in the first month of 2020

The third week of January was a tumultuous one. While the market is yet to enter the long-awaited bull run, most cryptocurrencies have seen significant price spikes in the first month of 2020.

The latest State of the Network report from Coin Metrics took a deep dive into the market, analyzing everything from coins held by crypto exchanges to the causes of massive price swings in many altcoins.

According to the report, the best performer of the week has been BSV, whose 67 percent price increase is believed to have been caused by the media stir surrounding Craig Wright‘s trial. Dash came in second with a 58 percent raise, while Ethereum Classic ranked third with a 53 percent increase in price.

Graph showing percent change in price for the top 12 cryptocurrencies over the past week
Graph showing percent change in price for the top 12 cryptocurrencies over the past week. (Source: Coin Metrics)

With both ZCash and IOTA seeing outsized gains the past week, with 44 and 30 percent price increase, the report concluded that a momentum-based strategy related to these assets may be possible.

Bitcoin’s unrealized potential shows a slight price increase could excite investors

The world’s largest cryptocurrency, however, showed much more moderate gains. Bitcoin rose only 6 percent between Jan. 13 and Jan. 19, outperforming only low market cap coins such as Maker, Huobi Token, and LEO.

Graph showing percent change in price for 12 cryptocurrencies over the past week
Graph showing percent change in price for 12 cryptocurrencies over the past week. (Source: Coin Metrics)

Nonetheless, the modest price gains don’t mean that the confidence in Bitcoin is lacking. According to Coin Metrics, better times lie ahead.

“If historical price cycles are a reliable guide, we should expect further periods of only moderate price growth interspersed with brief periods of rapid growth and corrections,” it said in the report.

Also, when looking at the distribution of the estimated cost basis for Bitcoin, the report found that the current distribution shows that the vast majority of Bitcoin has an estimated cost basis of less than $12,000.

That means that around 72 percent of all Bitcoin in circulation now has unrealized gains.

Chart showing the estimated cost basis distribution for Bitcoin on Jan. 19, 2020
Chart showing the estimated cost basis distribution for Bitcoin on Jan. 19, 2020. (Source: Coin Metrics)

This is in line with data from blockchain analytics firm IntoTheBlock, whose “In/Out of the Money” index shows that 74 percent of Bitcoin holders have bought their coins at a price lower than the current’s $8,648.

Coin Metrics believes that this amount of profitable holders only need a slight nudge in terms of a price increase to regain their confidence in the market. With even the slightest price swing capable of dramatically improving investor sentiment and triggering a bull run, it seems that the crypto market is up for an eventful few weeks.

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Priyeshu Garg
Author

Priyeshu Garg

Analyst @ CryptoSlate

Priyeshu is a software engineer who is passionate about machine learning and blockchain technology. He holds an engineering degree in computer science engineering and is a passionate economist. He built his first digital marketing startup when he was a teenager, and worked with multiple Fortune 500 companies along with smaller firms. When he is not solving transportation problems at his company (Ola), he can be found writing about the blockchain or roller skating with his friends.

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