Bitcoin’s rally looks to have legs as the ascent is backed by a pickup in blockchain activity and a long-term technical indicator that is about to turn bullish.
While bitcoin has gained 30% this month, the user activity on the network, as measured by the seven-day average of the number of active entities, has increased 19% to 284,179, according to data provided by Glassnode.
An increase in network adoption along with a price increase is said to confirm the uptrend.
“More active market participants has historically correlated with growing interest in the asset during early-stage bull markets,” Glassnode wrote.
Glassnode defines active entities as a “cluster of addresses controlled by the same network entity.” The metric includes both businesses like exchanges and custodians and individuals.
The current tally of active entities is the highest in five months and on par with the number observed at the beginning of the bull run in late 2020.
Institutional participation has increased along with network adoption, as evidenced by the uptick in the median size of on-chain transactions from 0.6 BTC to 1.3 BTC since September.
“An increased typical transaction size is not synonymous with price appreciation, but indicative of larger and even institutional sized capital flows present on-chain,” Glassnode said, adding that the dollar value of the average transaction size has also increased.
The technical outlook appears to be in sync with the bullish on-chain data, with the 100- and 200-day moving averages (MA) on track to print a bullish crossover in the next few days for the first time in 16 months.