First Mover: As Bitcoin Tops $13K, Analyst Explains How Blockchain Gives Clues on Next Move

Bitcoin was higher, just above $13,000 and rising for a seventh straight day – the longest winning streak in six months.

“A continuation would probably require more positive news,” Matt Blom, head of sales and trading for the publicly traded cryptocurrency firm Diginex, wrote Thursday in a note to clients.

In traditional markets, European indexes rose on positive corporate earnings and strong German manufacturing data, and U.S. stock futures pointed to a higher open. Gold strengthened to $1,911 an ounce.

Market Moves

A hallmark of the blockchain analysis is that there’s all sorts of data on the distributed computing networks available publicly to anyone with a browser.

So for crypto traders, why not use the data to get an edge?

CoinDesk’s Omkar Godbole talked to Philip Gradwell, chief economist at blockchain intelligence firm Chainalysis, about the data points he thinks are most important for crypto traders.

Below is a condensed list, though Godbole’s full article includes a link to a video of the original interview.

1) Exchange inflows. A surge in a rising market might indicate looming selling pressure, a sign of feeble investor confidence.

2) Trade intensity. The metric, which measures the number of times an inflowing coin is traded, “tells us how many people are willing to buy bitcoins sent to exchanges,” according to Gradwell. So an uptick is a sign of trend strength.

3) Interexchange flows. Net flow from crypto-to-fiat exchanges to crypto-to-crypto exchanges suggests the market is dominated by stablecoin traders. In this scenario, a rise in the stablecoin’s issuance could be considered a leading indicator of an impending price rally.

4) Liquidity. A sustained rise in the number of illiquid entities — defined as those that send less than 25% of the assets it receives — is a sign of a strong long-term holding sentiment, and thus a bullish indicator.

5) Value transfers across blockchains. The metric represents usage of the…

Read More