As a seasoned crypto investor with several years of experience under my belt, I’ve seen my fair share of market fluctuations and price movements. The recent surge in bitcoin (BTC) price past $60,000 to the $67,000 zone due to lower-than-expected inflation rate news is a welcome development. However, I remain cautiously optimistic as demand for the cryptocurrency has yet to pick up significantly.
The cost of a bitcoin (BTC) coin has climbed from over $60,000 to around $67,000 following the announcement of a smaller-than-anticipated US inflation figure.
The most recent CryptoQuant weekly update indicates that Bitcoin’s current surge can be attributed to a decrease in supply pressure. Nevertheless, there hasn’t been an observable increase in the desire or need for purchasing Bitcoin yet.
Bitcoin Selling Pressure Declines
The decrease in Bitcoin sellers’ urgency, as evidenced by on-chain data from short-term investors and OTC trading desks, is becoming apparent.
Since the end of April, the amount of Bitcoins held on Over-the-Counter (OTC) desks has remained relatively stable. This suggests that there’s been a decrease in Bitcoin being offered for sale by market participants. The rise in Bitcoin holdings on these desks began on March 10 when Bitcoin reached an all-time high of $73,000, with an additional 60,000 BTC added. However, this increase has ceased since late last month.
In simpler terms, the short-term Bitcoin investors who enjoyed substantial profits earlier in March now find themselves in the red, having used up their earnings. With no more profits to offset their losses, these traders are currently experiencing unfavorable price levels. Historically, such situations have corresponded with temporary price bottoms.
Based on the analysis of CryptoQuant, the evidence that the cryptocurrency market may have reached its bottom is strengthened by the significant decrease in miner profits. Bitcoin miners are currently earning insufficient revenues, with their profitability sinking to levels last recorded during the COVID-19 market crash in March 2020. Historically, such low miner profits have been indicative of market bottoms.
Demand is Yet to Pick Up
As a researcher studying the Bitcoin market, I’ve observed that its demand growth seems to have levelled off after a month of slowing down. However, this doesn’t necessarily mean a decrease in overall demand. In fact, the increase in BTC holdings among permanent investors and large-scale market participants suggests that these groups continue to drive significant demand for Bitcoin.
Despite the recent price increase in Bitcoin (BTC), its demand would still need to grow more significantly for the market to maintain this uptrend. This demand may originate from the Bitcoin exchange-traded fund (ETF) market on the spot exchanges as well as other BTC investment funds.
According to CryptoQuant analysts’ assessment, the crypto market could benefit from additional institutional-grade Bitcoin purchases through spot Exchange-Traded Funds (ETFs). The interest in these investment vehicles seems to be escalating, as they recorded over $560 million in total inflows within the past two trading days.
As a researcher observing the cryptocurrency market, I’ve noticed an impressive increase in the liquidity of stablecoins. This trend could be indicative of an upcoming price rise for Bitcoin.
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2024-05-19 17:07