Bitcoin has shown anÂ extreme resilience against bearsÂ that want to crash its spot rate below $10,000. And an on-chain analyst explains why.
Forex professional Cole GarnerÂ issued a string of tweetsÂ earlier Tuesday to illustrate a divergence between Bitcoinâ€™s bearish price moves and its growing network activity last week. The cryptocurrency fell to as low as $10,427 on Thursday. In the same period, its total active addresses soared above 22,000, its highest level in over two years.
Mr. Garner called the current price-address divergence a â€œnew bull market catalystâ€ as he added more cues to prove its sustainability in the long-term. The analystâ€™s key focus was the origin of Bitcoinâ€™s new addresses. And he speculated that they were coming from the crypto mining-rich territory of China.
THE PRO-BITCOIN CHINA CAMPAIGN
Ahead of the third quarterâ€™s close, the Chinese media ran a â€œcoordinatedâ€Â pro-Bitcoin agendaÂ across multiple outlets. Dovey Wan, the founding partner of Primitive Crypto, was among the first to notice Chinaâ€™s change-of-heart towards the king cryptocurrency as they openly called it the â€œbest performing asset YTD.â€ YTD stands for year-to-date.
Mr. Garner noted that the number of daily active addresses on the Bitcoin blockchain started rising after Chinaâ€™s Bitcoin coverage. The analyst speculated that Beijing â€œseems to want to ignite the [Bitcoin] bull marketâ€ despite their long track of suppressing the cryptocurrency.
â€œChina dominates BTC mining â€” and no doubt holds more BTC than any other country, by a wide margin,â€ he explained. â€œBitcoin is Chinaâ€™s national treasure. Sooner or later, maximizing BTCâ€˜s potential becomes an unavoidable economic incentive.â€
The statement also appeared as leading technical indicators showed an increase in accumulation trends. As BitcoinistÂ covered earlier, a so-called â€œOn-Chain Smart Money Indicatorâ€ noted that more whales were buying Bitcoin last week. Its spotter, an independent analysis firm TradingShot, explained the indicatorâ€™s relevance using an old fractal.
â€œIn Nov 2018, smart money accumulation is spotted at 6k, and the price dropped to 3k in the next 2 months with more accumulation happening. While the BTC accumulated at 6k took an almost 50% loss, the price soon rose to 12k+, generating a 2x.â€
TradingShot also hinted at the possibility of the Chinese buying Bitcoin as its price trades lower towards $10,000.
Mr. Garner further discussed the role ofÂ Tetherâ€™ stablecoin USDTÂ in drawing the Chinese buyers towards the Bitcoin market.
Data from the past two weeks revealed a huge uptick in USDT printing that started appearing right before Chinaâ€™s Bitcoin coverage.
â€œChina dominates USDT volume globally â€“ and Tether dominates their fiat onramp liquidity,â€ said Mr. Garner. â€œAnd of course, Tether printing has been an effective leading indicator for years.â€
The analyst expected Bitcoin retail market to reflect the ongoing liquidity on-ramp at a later stage. He said he remains â€œfundamentally bullishâ€ on the cryptocurrency, adding that traders should see higher levels by Christmas.