Bitcoin Price Defends Critical Level as Fees Plummet, Transactions Surge

Bitcoin’s price may have stagnated through the early part of 2019, but underlying fundamentals show the market has turned a corner with respect to fees and transactions. As Diar recently pointed out, bitcoin fees plunged to four-year lows in January, while transactions hit their highest levels since 2017.

BTC/USD Update

In terms of price action, bitcoin has shown very little upside this week. At last check, the digital currency was trading at $3,557.27 on Bitstamp, where it was virtually unchanged compared with Wednesday. As we reported on Wednesday, the BTC/USD exchange rate is struggling to overcome the 50-day moving average. Momentum has improved somewhat, with the relative strength index (RSI) crossing the 50 mark.

Aggregate data from CoinMarketCap show an average price of $3,619.32. That average is skewed higher by exchanges like Bitfinex, where bitcoin trades at a significant premium compared to other platforms.

More than $6.4 billion worth of bitcoin traded hands on virtual exchanges Thursday, maintaining a high flow of turnover since last week. BitMEX, a popular derivatives exchange, was the largest market. At 8.8% of the daily turnover, its share has declined in the last 4 hours. Spot exchanges account for the remaining volume.

Bitcoin’s volatility index has declined further this week, and on Wednesday reached its lowest level in three months. The 30-day volatility index dropped to 1.97%, according to bitvol.info. That’s the lowest since the bitcoin cash-induced selloff that began on Nov. 14.

Fees Plunge, Transactions Rise

As bitcoin’s price has stagnated, its underlying fundamentals have improved, according to Diar, a weekly cryptocurrency publication.

In the Feb. 11 edition of its weekly reports, Diar said, “Bitcoin transactions hit a one-year high last month nearing levels seen in the 2017 ramp up to the price boom.” At the same time, median fees have reached “levels not seen since 2015 despite the total monthly bitcoins moved on-chain standing at higher levels than seen throughout most of 2018.”

Improving fundamentals have caused some to speculate that the bitcoin whales are gearing up for the next bull run. Diar’s report comes at a time when bitcoin’s most ardent supporters are doubling down on their prediction of a future price breakout.

On Wednesday, former Goldman Sachs executive and Galaxy Digital founder Mike Novogratz said bitcoin will eventually become “digital gold” thanks to institutional demand. Last week, Twitter CEO Jack Dorsey told the Joe Rogan Experience podcast that bitcoin will “probably” become the internet’s native currency in ten years’ time.

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Author:
Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi