• On-chain factors show positive growth for Bitcoin, which is yet to be reflected in its price
  • Market sentiment on Bitcoin has been positive since October
  • A rebound in DeFi tokens could benefit Bitcoin

Technical indicators are showing strong signs that Bitcoin's price is about to rally in the next few months, similar to what happened in 2017.

After Bitcoin hit as high as $$11,736 and closed at $11,535 on Monday, the rally eventually stopped and on Wednesday, the benchmark cryptocurrency closed at $11,427, which was previously a resistance level that bull traders try to defend now.

Still, Bitcoin has remained above $11,000 in the last six days and analysts are pointing to multiple data to explain why the bull run has begun.

Since October, the market sentiment around Bitcoin has been positive, data from analytics firm TheTie shows. The daily sentiment is measured by analyzing the tone of conversations on Twitter and upon quantifying this data, any number above 50 is considered positive. So far, this metric has increased to as high as 80 and it currently sits at 62.4, a clear positive sentiment signal, Cointelegraph reported.

Willy Woo, a cryptocurrency analyst, said "investor activity" has also picked up for Bitcoin. However, this positive signal is still not reflected in the price.

Next, the number of Bitcoins on exchanges has also declined. Exchanges are used normally by investors to trade. Following that lead, if investors are constantly withdrawing their crypto assets from exchanges, it is a sign that they expect further increase in price in the future and are not looking to trade right now. This accumulation behavior of investors resembled what happened before the 2017 bull market began, Cointelegraph reported.

While decentralized finance (DeFi) directly benefits Ethereum, the second largest cryptocurrency, it also offers benefits to Bitcoin in the form of "Wrapped Bitcoins", or Bitcoin tokenized on the Ethereum blockchain.

So far, the market has weathered key bearish news, including the Justice Department's crackdown on BitMEX, a highly popular derivatives exchange, and the U.K.'s ban on cryptocurrency derivatives last week. Instead, investors got excited on news about fintech company Square investing $50 million into Bitcoin.

Uncertainty remains, particularly on what many analysts think would be an impending crackdown on decentralized finance. However, traders are currently expecting a rebound in the price of DeFi tokens, which could likely push the price of Bitcoin above $12,000, the Cointelegraph report said.

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This picture shows a person holding a visual representation of the digital crypto-currency Bitcoin, at the 'Bitcoin Change' shop in Tel Aviv, Israel, Feb. 6, 2018. JACK GUEZ/AFP/Getty Images