This is why Bitcoin price managed to recapture $50,000 first time since May, almost 90% of holders are now profitable

By Selena On Aug 23, 2021

Cryptocurrency market capitalization increased by $100 billion in a single day as Bitcoin price surpassed $50,000 for the first time in more than three months, and ADA made another price record, near $3. There are many reasons explain why the market is going up. Check out the reasons below.

Why Bitcoin price managed to recapture the $50,000 level three months after losing it?

Right after, Elon Musk started criticizing Bitcoin for using too much energy for mining. China’s crackdown has also just begun, but the impact of both is already clear on the price of the leading cryptocurrency.

Then BTC dropped over $20,000 in the following weeks and stood there for a while. However, after the most recent drop below $30,000 on July 20, the situation has changed dramatically.

BTC started to regain some of its lost prices quickly, breaking through $40,000 and moving upward. Most recently, it tried to break through $49,000 on a couple of occasions and yesterday only hit $200 to hit $50,000 but failed.

However, this particular level also fell when Bitcoin spiked for the first time since the previous date in mid-May. Consequently, the cryptocurrency’s USD value has increased by about 72% since the July 20th dump.

BTC/USD 4-hour chart | Source: TradingView

As of now, BTC still stands above $50,000, and its market capitalization has neared $943 billion.

According to CryptoQuant, there are five reasons for this BTC rally to $50,000. The first is after China ban mining, and we observed slowly hashrate recovery. Weak hands were selling Bitcoin at a loss, and the Fear and Greed index showing “Extreme Fear,” nobody wants to buy BTC.

Source: CryptoQuant

The analyst also included the short squeeze on the Bitcoin futures market between July 21 and July 26 and the large-scale Bitcoin purchases on centralized crypto exchanges. And the final reason is that crypto miners have eased their selling pressure on the BTC market starting from May 17th.

The analyst now expects the leading crypto to retest the price range in the $48,000-$49,000 area and then surge above the $51,000 level to try and set a new high above $57,000.

Also, as reported by AZCoin News, less than a year after the initial crypto steps in the US, PayPal has enabled eligible customers from the UK to interact with digital assets. This is good news for the crypto market and can explain why the price is bullish.

Bitcoin’s latest rapid rise has given us on-chain data showing that almost 90% of all BTC holders in the market are now profitable. In addition to the profitability of nearly all of the Bitcoin addresses on the network, the coin’s development activity also rises alongside the asset’s price. But for undisclosed reasons, weighted sentiment is far from being euphoric.

Source: Glassnode

As you can see, most of the addresses on the chain have entered the profit zone after reaching a minimum of 70% back in June. According to Glassnode, most Bitcoin owners remain in profit since the average entry on the market is currently at $45,000. The highest value on the indicator was reached back in late April and early May while Bitcoin was updating all-time highs day after day.

The indicator’s high values may indicate that the market is oversaturated, and traders may take profits sooner or later not to fall victim to a possible market retracement.

According to CryptoQuant, miner reserves close to this year’s ATH, stablecoin reserves near ATH, network activity higher but still low. On the plus side, BTC miner reserves close to this year’s ATH (expecting higher prices medium-term). Stablecoin reserves on exchanges close to ATH (a lot of potential money on the side).

Pick-up in activity in both metrics with BTC price waking up to the upside since August. But overall, activity is still relatively low. Furthermore, the good news is that Bitcoin price strongly correlates with development activity on Github. The indicator shows the GitHub submissions rate. The fundamental development of Bitcoin might be an attractive sign for various investors.

Bitcoin’s rally has sent the altcoin market up. Cardano continues to gain the most from the top ten coins. ADA has surged by 8.5% again and charted a new all-time high at nearly $2.9. Meanwhile, David Gokhshtein hinted that ADA/USD might continue its bull run until September 12th, the day Cardano is going to integrate a smart contracts feature to its blockchain via the Alonzo upgrade.

$ADA is just a monster right now.

I’m trying to figure out it’s price before 9/12/2021.

— David Gokhshtein (@davidgokhshtein) August 23, 2021

The crypto market cap has registered a multi-month record as well. The metric is up by about $100 billion in a day to above $2.159 trillion.

Overall market data and technical indicators also suggest a slight market overheat.

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