Bitcoin’s confidence game – How it can be key to the road to $100K
- Bitcoin’s investor confidence has been strong lately, with the Confidence Index with a reading of 0.75
- Cryptocurrency gained by 0.92% over the last 24 hours alone
For the first time in 2 weeks, Bitcoin [BTC] noted gains on two consecutive days. In fact, at the time of writing, Bitcoin [BTC] was trading at $97,640, following a 1% hike on the charts. This seemed to extend the cryptocurrency’s bullish outlook on the weekly charts too.
Now, although BTC is continuing to trade sideways, some stakeholders aren’t concerned. CryptoQuant analyst Frost, for instance, projected optimism – A sign that investor confidence still remains strong across the market.
Investor’s confidence remains high for Bitcoin
In his analysis, Frost posited that prevailing market conditions suggest Bitcoin investors still expect the crypto’s price to recover.
According to him, while a high confidence index usually occurs in a bull market, once it approaches 1, a market top follows. At the time of writing, the confidence index sat at around 0.75.
Source: Alphractal
Conversely, when these indicators fall to almost zero, it has always signaled a potential market bottom.
At the time of writing, the index seemed to be approaching that threshold – A sign that a potential long-term accumulation opportunity may be around the corner.
To put it simply, while the market has significant bullish momentum right now, it is yet to reach extreme euphoria.
What do the charts say?
While the aforementioned analysis offered a promising outlook to investors, it’s also essential to determine what other indicators say.
Source: Bitbo
For starters, Bitcoin’s long-term holder’s supply has continued to rise, signaling strong confidence among LTHs.
When this is rising, it means that long-term holders are not selling their BTC – Indicative of strong market confidence.
Source: Bitbo
Additionally, Bitcoin’s NUPL has remained within the belief/denial phase, signaling growing investor positive sentiments.
This, because most of the holders are in profit and they still believe in the rally. Historically, BTC has surged whenever the NUPL has been at this level. For instance, in 2021, Bitcoin’s NUPL hit 0.75% when it was valued at $64k for the first time.
Source: Messari
Equally, Bitcoin’s return on investment is still highly attractive to investors. For instance – The long-term Sharpe ratio turned positive, implying that the risk to investment for BTC is lower compared to traditional assets. Therefore, with a value of 0.775, the Sharpe ratio seemed to suggest that investors may be highly confident about’s BTC’s market returns.
Simply put, Bitcoin is still backed by strong investor confidence. With long-term holders still bullish, BTC may be well-positioned for more growth. If current conditions hold, we could see the cryptocurrency reclaim $99,436 and attempt $100k once again. However, with strong volatility in the market, a pullback wouldn’t be a surprise either.