Bitcoin Price Analysis

Bitcoin price analysis; Comparing the 2017 market with 2021


A comparison of bitcoin market cycles shows that the volume of institutional investments is increasing in 2021 and in contrast to 2017. In this article, we will examine some of the structural criteria of the Bitcoin market under a magnifying glass and compare this year’s cycle with the 2017 cycle.

The NVT index measures the value of a digital currency network using intra-chain trading volume, according to CryptoPutito. According to Willy Woo, a digital currency market analyst who first introduced the model, the “NVT-based value index” is obtained by multiplying the volume of intra-chain transactions by the two-year average of the “NVT ratio”. It should be noted that the ratio of NVT is obtained by dividing the market value by the total volume of network transactions.

In 2018, after the cycle reached its peak, the 30-day and 90-day moving averages of the NVT-based value index declined steadily for almost 12 months. However, since the 50% drop in the price of Bitcoin in May, moving averages have risen to levels above their previous high of $ 64,000.

The change in pricing results based on the NVT index can be attributed to the higher volume of macro activities compared to small network transactions.

Bitcoin price analysis;  Comparing the market in 2017 with 2021
Comparison of Bitcoin valuation models

Analysis of intra-chain activities

In all previous market cycles, the 7-day moving average of “medium-sized intra-chain transactions” and the “average value of transactions” has risen more than four times the level of the 360-day moving average and then decreased to a 360-day moving average.

The volume of transactions within the medium-sized chain and the average value of transactions represent large and small transactions. When the average value of transactions increases, it means that more high-volume transactions are made. On the other hand, the volume index of medium-sized transactions represents micro-transactions.

Interestingly, these indices have not yet grown more than 4 times. In addition, the average value of transactions is always correlated with the volume of transactions within the medium-sized chain, which means that the level of both macro and micro activities increased by more than 4 times the price of the 360-day moving average by increasing the price and reaching a historic high of $ 64,000. Has found.

Also read: Weekly Anchor Analysis of Digital Currencies

There has been a surprisingly significant divergence between the average value of transactions and the volume of medium-sized intra-chain transactions. This divergence also reflects the traces of institutional investors in this ecosystem who have different views and opinions.

Bitcoin price analysis;  Comparing the market in 2017 with 2021
Comparison of the volume of transactions within the medium-sized chain and the average value of transactions

Have more institutional investors entered the bitcoin market?

Following in the footsteps of institutional investors, it is necessary to consider another valuable cross-chain measure called the Fund Flow Ratio.

Institutional investors are mainly withdrawing their assets from exchange offices. Therefore, we can observe the weight of this group by measuring the turnover ratio. The ratio of capital turnover is obtained by dividing the volume of inputs and outputs of exchange offices into the total network transactions. The study of historical trends shows that this ratio has decreased after reaching the historical peak and entering the downtrend market.

Despite a 50% correction in the market in May, the capital turnover ratio has increased since January. Approximately 96% of intra-chain transactions have nothing to do with exchanges. The simple conclusion can be that the participation of institutional investors in the digital currency market is increasing.

Bitcoin price analysis;  Comparing the market in 2017 with 2021
Comparison of capital turnover outside exchanges and changes in bitcoin prices

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