The crypto market has been showing a rising tide over the last month, but data suggests that growth across all asset classes has not been equal.
Bitcoin ( BTCUSD) reached $50,000 last week for the second consecutive week. This extended a rally that put the grim sell-off of May behind it. Although notable for its volatility gains in the largest cryptocurrency could have been lost in the surge in prices across the entire asset-class.
With a majority of decentralized finance and non-fungible token (NFT) trading happening on the Ethereum ( ETH-USD) blockchain, the second largest cryptocurrency by market capitalization rose by a third from $2,700 to $3,900, a growth rate 17 percent higher than BTC.
Other blockchain-based currencies, such as Cardano ( ADA – USD), the third most valuable cryptocurrency, have more than doubled, while Solana ( SOL – USD) has more that tripled its value in the past month. For the past two weeks, ADA and SOL continue to hit all-time highs almost daily.
Bitcoin IRA is an investment platform that allows retail investors to gain crypto exposure in retirement accounts. The previous month saw a record-breaking inflow of new accounts.
Chris Kline, Chief Operating Officer of the company, stated that they broke their record in the first quarter, right before Bitcoin ran from $45,000 – $65,000. “We are seeing the same pattern again.” This past month [August] felt almost like April but twice as large.
The search for growth
Bitcoin IRA currently has approximately 120,000 client accounts and $2 billion in assets. The platform’s weight doesn’t move markets, but the influx of retail investors opening new accounts – especially tax-advantaged IRA account accounts – is a sign of how curious investors are about traditional ways to get involved in this market.
Kline estimated that his clients have 43% in bitcoin and 27% in Ethereum. The remaining 30% is in a mixture of other cryptocurrency. The company currently offers 10 different cryptocurrency options and plans to increase their offerings by more than doubling in the fall.
In May, Ethereum reached its highest point above $4,000 and the company noticed a huge influx in swaps from BTC to ETH. This indicated that many of his clients were switching to ETH from BTC.
But, the last few weeks? Kline stated to Yahoo Finance that he didn’t think so at this point.
There could be a delay, but that is possible. Retail buyers want percentage growth. Bitcoin is the dominant cryptocurrency, but it has relatively steady growth while ethereum experiences exponential growth. Kline said that this is what attracts their attention.
According to Will Clemente (an analyst at Blockware Solutions and crypto mining broker Blockware Solutions), Bitcoin’s August peak of $50K was a “key technical and psychological level.”
Yahoo Finance’s Clemente stated that bitcoin’s price had remained stable for seven days. He called it a “volatility squeeze”. This is because buyers and sellers have acted in concert to reduce the asset’s volatility.
Analysts suggested that this could be changing. A bitcoin volatility squeeze usually takes one to two weeks to resolve.
Clemente stated, “That’s not telling the direction. It’s just telling that there’s going be a big move soon.”
The dominant method of predicting buyers or sellers in cryptocurrencies is still price action analysis. However, it’s more controversial than the others. Clemente’s specialty, on-chain analysis has become a critical tool for investors looking to gain insight into this emerging asset-class.
The on-chain technique is similar to technical analysis. It attempts to predict future movements based on demand and supply. It relies on far more data than is available for assets that are on publicly accessible blockchains.
Clemente could not predict the price shift in Bitcoin. However, he did point to some supply shock ratios such as the movement from long-term holders to speculators and the exchange supply ratio which indicates the relative supply of Bitcoins that are available for purchase on exchanges.
Clemente says that each of these metrics have risen higher since Bitcoin reached $50,000. Supply shocks are usually preceded by an increase in Bitcoin’s price.