• Bitcoin price experienced a modest rally in January of 2022.
• On-chain intelligence firm Santiment has warned crypto traders to take extra caution in the coming weeks.
• The Taproot upgrade has seen block utilization spike to 100 percent, and its adoption metric has risen to an all-time high.
Bitcoin Price Rally
Bitcoin price saw a modest rally in January of 2022 after suffering from several high-profile collapses including Terra Luna UST and FTX crypto exchange. After rejecting $24k for the past five days, the Bitcoin price exchanged around $23k on Tuesday. Additionally, small caps altcoins such as Baby Doge Coin have recorded significant gains which may indicate the end of a cycle.
On-chain intelligence firm Santiment cautioned crypto traders to be wary of bear traps in the upcoming weeks, as money is moving from large caps into small caps without an increase in top cap prices. As such, extra precaution should be taken when investing in these markets.
The Taproot upgrade was designed to increase overall network security with each successfully mined block, and miners overwhelmingly backed this upgrade. This led to block space utilization reaching 100%. Moreover, Taproot script spends can only be made from existing taproot outputs using a two-phase commit/reveal procedure for inscriptions. The adoption metric for Taproot has reached an all-time high of 7.47% and its utilization rate is currently 2.84%.
Impact on Price
Analysts are now debating whether increased on-chain activity from the Taproot upgrade will result in a surge of Bitcoin prices or if it will remain at current levels regardless of this development. Although it remains unclear if there will be any correlation between increased on-chain activity and a rise in Bitcoin’s value, analysts agree that heightened security due to greater block space utilization could bring more institutional investors into the market and thus potentially drive up prices over time.
Overall it appears that Bitcoin’s potential future performance depends largely on how much attention it continues to receive from institutional investors as well as other factors such as regulation changes or technological advancements like Lightning Network or Sidechains which could impact its value either positively or negatively over time. It is therefore important for investors to stay informed about these developments so they can make better investment decisions going forward