Bitcoin scared many people when it reversed its trajectory and headed straight down to the $18,600 zone. However, as a ray of hope for the bulls, the charts printed a bullish hammer candlestick, validating crucial horizontal support around the $19,000 zone that has held so far, and looks likely to remain so.
Bitcoin’s Network Growth
There are several metrics to determine the activity on a network and, therefore, its overall health. One of these metrics is network growth.
By this metric, it is possible to determine how many new addresses are being created on the network at any time. From this data, anyone can calculate how much network adoption is occurring, whether the network’s performance is waning, or whether the network is gaining or losing traction.
Many have realized that growth in the number of addresses in a network is proportional to growth in price. The same applies to decreases in price and the number of new addresses.
A good example of this scenario was when bitcoin reached its all-time highs around November 2021. The number of new addresses in this period was observed to have formed an extremely visible bearish divergence despite the price increase, and the price itself followed suit, plummeting to where it now sits.
Conversely, the number of new addresses on the bitcoin network has been increasing over the past month, going so far as reaching the descending resistance line of the divergence. If this number continues to increase over the coming weeks, it could signal a downtrend; therefore, the current crypto winter is close to being over.
Bullish Hammer on Bitcoin
On the daily chart, we can see that bitcoin bounced sharply from the $18,600 support after reversing its trajectory towards the $22,000 zone.
This bounce created a bullish hammer pattern (a candlestick pattern showing a long lower tail and a bullish close)
Besides showing that the bulls are now in control, the candlestick pattern also shows that the $19,000 support is now validated as a strong one.
The RSI on the chart also shows a bullish divergence with its trendlines still intact. And as long as these indicators remain in place, the supports remain valid and strong.
Disclaimer: The author’s comments and recommendations are solely for educational and informative purposes. They do not represent any financial or investment advice. Always DYOR (do your own research)