Bitcoin made a big entry in the fourth quarter, testing the $ 48,000 mark at the start of “Uptober.” With the top coin gaining around 18% in less than a week, the crypto market sent out a strong trend signal. As gains paved the way for improvements in on-chain metrics, the broader market regained momentum.

At the time of writing, Bitcoin’s price has surged more than 10% in the past two days as the coin traded at 47.7K. However, with the price of BTC encountering strong resistance at $ 48.5,000, many in the market suspected that the sudden price increase was a “dead hop” giving wings to bearish theories for the top coin.

Recovery or a dead hop?

A dead hop in finance is used to describe a short-lived recovery from a sustained decline. It always shows up in the form of a small rally after a sustained downward trend in prices. At first, the upswing appears to be a reversal of the prevailing trend, but the downward movement quickly continues.

In the case of Bitcoin, the dead cat bounce theory resurfaced after BTC quickly recovered from its losses in September on the first day of October.

Interestingly, according to a CryptoQuant post, BTC has seen many dead cats pop up in the past. A closer look at the net flows of BTC over the last few cycles has shown that such price jumps have historically followed a certain pattern.

BTC’s exchange ‘Netflow’ rates the difference between inflows and outflows for the coin. The value is negative when outflows dominate and vice versa. In this context, persistently negative values ​​imply buying pressure and are generally optimistic about the price.

However, very positive Exchange Netflow values ​​follow or coincide with the formation of the Dead Cat Bounce. The trend was noted in 2017, 2018, and then 2019 when inflows dominated the BTC chart.

Source: CryptoQuant

This year, too, the peak that formed after the ATH in May was actually a dead cat bounce, which is confirmed by very positive netflow values. This time around, however, net flows were heavily negative and the trend was similar to the 2017 cycle when outflows dominated and negative net flows boosted price. So it looks like the dead cat jump theory didn’t hold up given the current negative net flows.

Key figures that give a healthy outlook

As the outflows still dominate and the long-term holders absorb more BTC, with each cycle re-accumulating the supply-demand curve for. highlights BTC had a bullish outlook. However, considerable skepticism about BTC’s price gains before the $ 49,000 mark made itself felt in the low trading volumes on both the spot and options markets.

Source: TMXCtrades

That said, a large number of long calls to BTC on $ 100,000 by October 2nd indicated high long-term expectations for the top coin. Apparently, the environment with the green of the Bitcoin candles looked favorable for the first leg of the Bitcoin rally to begin. It looks like the final quarter of this year, which is quite interesting for BTC, will be an interesting time for market participants.


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