History often rhymes with Bitcoin price starting to rise in August

Bitcoin’s Layer 2 payment protocol, the Lightning Network, has expanded its capacity rapidly in recent years. This solution enables faster transactions on Bitcoin and thus solves the problem of network scalability.

Since its inception, the network’s capacity has almost doubled from less than 1,000 BTC to 1,806 BTC. This year in particular there has been an impressive increase. As noted in a report by Arcane Research, 806 BTC has been added to capacity since January.

Lightning Network BTC capacity | Source: Arcane research

As can be seen in the graphic above, the Lightning Network rose from 1,100 to 1,200 BTC in 39 days and from 1,700 to 1,800 in 5 days. According to the statistical, the network capacity increased by 20% in this month alone to 1,871.95 BTC (blocked on over 57,000 channels).

According to Lightning Labs’ Ryan Gentry, the latest growth has come from four key areas. First, Umbrella, RaspiBlitz and Voltage’s partnership with a series of nodes and liquidity management guides put together by Leo Weese and Hannah Rosenberg made the process of creating nodes and connecting them online a breeze. He also said:

“This has laid the foundation for some super dynamic communities of node runners like Ring of Fire and Plebnet. These groups are the original participants and the next wave of LN startups is coming … lots of interest and great memes. “

Additionally, the significant volume growth over the past 30 days has resulted in massive capital inflows to / from popular nodes. According to the tweets by Gentry, popular nodes made up a third of the 300 BTC last month.

Increase in node capacity in the last 30 days | Source: Gentry

According to him, the acceptance of Bitcoin in El Salvador plays an important role for the Lightning Network.

People and businesses are finally starting to recognize the Bitcoin Lightning Network as more than just a payments network. Brothers share:

“It’s a private data network with incentives where satoshi is just one type of data. Each routing node has 4 resources that can be monetized: Bitcoin liquidity, storage, bandwidth and computation. We have started to build a market for liquidity allocation with the Lightning Pool. “

Therefore, these resources will be made available on the market in the future. Gentry also says that the above elements combine to form a “flywheel that starts to spin”. With this development in the Bitcoin area, it is possible expectations:

• more users in the network,
• more volume,
• more fees to attract more node runners,
• Other developers are interested.

History doesn’t quite repeat itself, but …

Bitcoin started 2021 with an unprecedented rally and high, reaching a new all-time high of $ 64,863 in April. But in just six weeks from April to May, BTC tumbled from its all-time high to less than half its value. In the past few weeks it has stalled around the $ 32,000- $ 35,000 resistance level.

Along with the price changes, investor sentiment continues to alternate between enthusiasm and dissatisfaction. Interestingly, this trend has also occurred in the past. So is history repeating itself completely?

In a tweetstorm, Trader Kaleo examined possible similarities between the Bitcoin chart from July 2020 and the current period. The analyst highlights the course of the past year with the following words:

“Remember a year ago everyone thought BTC looked awful. What to do is take profits before they drop below $ 6,000 even though the technology is in full swing. It wasn’t long before history changed after that. “

The chart below explains this and is somewhat optimistic given the ongoing market turmoil.

Source: Twitter

In addition, the analyst also gives an interesting perspective when comparing the declining scenarios between July 2020 and 2021.

“The graph looks particularly terrible between July 9th and 20th.”

Source: Twitter

However, as shown above, the coin rallied afterwards and broke out of the bearish period.

When asked if there is a chance history will repeat itself perfectly at this point and course recover, Kaleo said:

“That doesn’t mean history repeats itself perfectly, but it often rhymes.”

The next diagram represents the current period.

Source: Twitter

While the chart looks bearish, it is being viewed from the perspective of its expected BTC price action in July. Continuing the notion that the current price of BTC is in line with the past, the analyst expects a similar price rally this July as last year. According to the attached graph, Bitcoin could consolidate by the end of July and then hit the $ 48,000 mark in August.

Looking at past analyzes or observations that point to growing unrest today, Santiment takes a similar view:

“Twitter sentiment towards Bitcoin remains negative in terms of the volume and tone our algorithm picks up. All in all, higher prices against a negative backdrop will surprise the crowd. “

Bitcoin social psychology | Source: Santiment

According to the graph above, Bitcoin tends to work in the opposite direction of sentiment. In particular, the crowd was mostly bullish in early January when BTC hit a new all-time high, but the price fell quickly. In contrast, Bitcoin had an impressive run to record a new ATH as the community sided with the bears.

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