Ethereum Showing Bullish Divergence On-Chain As Idle Bitcoin Addresses Start To Wake Up, Says Santiment
Blockchain analytics firm Santiment says Ethereum (ETH) is flashing a potentially bullish signal despite experiencing a difficult month in the markets.
In a new post, Santiment explains how increased token activity coinciding with a drop in ETH’s price is a sign of bullish divergence.
Santiment takes into account Ethereum’s NVT (Network Value to Transaction), which describes the relationship between transfer volume and market capitalization.
“Ethereum’s price retrace has coincided with a rise in the asset’s token circulation.
After a 10-month stretch of ETH not receiving enough network circulation to justify high market cap levels, our NVT model shows a bullish divergence due to such a dramatic dip occurring.”
Ethereum is currently down by over 7% and changing hands for $1,927. Just two weeks ago ETH was trading for nearly $3,000.
Moving on to Bitcoin (BTC), the analytics firm looks at a metric called “age consumed,” which Santiment defines as showing “the amount of tokens changing addresses on a certain date, multiplied by the time since they last moved.”
The firm believes increased activity when BTC falls below the $30,000 level indicates nervous traders are selling off their holdings.
“Bitcoin’s idle addresses have become more active this past week, especially during what was a major capitulation dip last Thursday and Friday.
Generally, when age consumed spikes arise during price drops, it’s related to weak hands exiting positions.”
At time of writing, Bitcoin is down by 4.9% and trading for $28,875.
Santiment concludes its market analysis by discussing how the crash of both TerraUSD (UST) and Terra (LUNA) was the most-talked-about crypto story of the week.
The firm notes that this is only the second time in three years that Bitcoin hasn’t been at the top of the list of crypto-related chatter.
“How big of a story was LUNA’s downfall this past week? For just the second time since 2019, an asset other than Bitcoin was the leading asset in terms of discussion rates on crypto forums.
The previous instance was Ethereum’s short burst in January.”
The algorithmic stablecoin TerraUSD remains down since its initial depegging from the US dollar on May 9th, with UST currently valued at a mere $0.08.
Terra was trading for over $80 until May 5th when it fell off a cliff and ceded the $1.00 level by May 12th.
Despite a huge cash infusion from the Luna Foundation Guard (LFG), LUNA is down another 19.32% and priced at $0.000151.
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