Five topics to keep an eye on as Exchange balances fall to pre-$61K lows

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Hodlers are becoming patient in the face of concerns that a continuation of Bitcoin’s bull run may take “some time” due to mixed signals from on-chain indicators.

Bitcoin (BTC) is off to a shaky start to the week as macro markets wiggle and Turkey’s currency loses 15% of its worth overnight.

Bitcoin has yet to please buyers, who are expecting sideways activity in the coming days, after a frustrating weekend that included a rejection at $60,000 in price.

The following are five variables that may affect how Bitcoin market activity unfolds as the new week begins.

 

All quiet among stocks

On Monday, the picture in equities is one of trepidation, as bond yield issues persist and the coronavirus bites.

Many people have been used to seeing Asian markets open with no movement. A increase in economic growth is expected to exacerbate bond concerns, with 10-year Treasury rates in the United States now at 1.7 percent after steadily rising in recent weeks.

China, on the other hand, announced that it had more resources to invest on financial easing, which officials say would minimise risk rather than raise it.

“This will not only provide positive incentives for economic players, but also help create an environment less likely to spawn financial risks,” Yi Gang, Governor of China’s central bank, the People’s Bank of China (PBoC), said at the weekend.

Simultaneously, several municipalities are seeing a return to or continuation of coronavirus lockout, amid outrage about the lack of success in relaxing limits on individual liberties pending vaccination rollouts and the arrival of spring.

Separately, Turkey’s national currency, the lira, fell 15 percent as soon as trade began. The battered economy did not prosper from a drop in sentiment following the firing of yet another central bank leader by President Recep Tayyip Erdogan.

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“Turkey picks worst time to fire central banker,” market commentator Holger Zschaepitz responded.

“Erdogan removed hawkish Gov Agbal, replacing him w/professor who says high interest rates cause inflation. Widening CA deficit, depleted FX reserves & inflation at 16% make a currency crisis more likely.”

BTC price fails to wow

Bitcoin sellers have been met with two days of disappointment following the failure of last weekend’s rally to be replicated.

Though analysts predicted that BTC/USD will break out at any point between Saturday and Sunday, the pair saw a firm rejection close to $60,000.

The result, which surprised others, was a drop below $56,000, followed by a moderate rebound to $57,700 on Bitstamp at the time of publishing.

In his most recent market remarks, Cointelegraph contributor Michaal van de Poppe was unconcerned by the incidents, noting that Bitcoin was just flowing within a common hallway.

“Bitcoin is so far, so good and that’s great,” he told Twitter followers.

“The $55K region is an interesting point of interest after rejecting the $60K barrier. Expecting a sideways range for a little.”

BTC/USD 1-hour candle chart (Bitstamp). Source: Tradingview

Crypto Ed, a fellow Netherlands-based analyst and investor, reported a new light dip and recovery trend overnight, with BTC/USD missing his scenario of a decrease to under $52,000.

Scott Melker defined ranging actions in a separate summary, summarising market behaviour as “still not much happening.”

Binance order book details highlighted the scale of the Bitcoin consolidation, with support and opposition closing in at $56,000 and $59,000, respectively, on Monday.

Difficulty continues into great unknown

Investors may be thirsty for fresh Bitcoin all-time highs, but two network fundamentals are already at or almost hitting new territory of their own.

At the time of writing, both hash rate and difficulty were firmly bullish — the former within 4% of all-time highs and the latter riding higher than ever.

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Bitcoin 7-day average hash rate chart. Source: Blockchain

Hash rate and mining difficulty, a classic predictor of price rises, highlight the latest bull run’s resilience and durability. The hash rate estimates the computational capacity devoted to processing transactions, while complexity reflects the competition among miners for block subsidies.

The challenge rose by 1.95 percent in the most recent automatic readjustment on March 19, signalling a return to uncharted terrain after the previous change was negative.

Such changes are a critical, if not the most significant, economic aspect of the Bitcoin network, helping it to respond to evolving miner behaviour while maintaining security.

“What critics refer to about Bitcoin being ‘speculative’ is that it provides no organic yield and never will, seeing it as ‘greater fool’ price appreciation,” popular Twitter account Parabolic Trav wrote about the phenomenon earlier this month.

“They fail to grasp the difficulty adjustment and the halving ‘Lesser supply reality’ counteracts ‘greater fool theory.’”

“Young” coins suggest bull run is far from done

Other on-chain metrics, though, paint a mixed image of where Bitcoin is in its bull run and how much price upside is still possible.

However, there is still plenty of wiggle room in terms of market sentiment, as lifelong hodlers are yet to be moved to sell en masse, also at $60,000.

According to Glassnode, an analytics provider, the percentage of coins held by older owners has not yet declined in accordance with past bull cycle tops, suggesting that there is still time before 2021 tops out.

 

Bitcoin circulating supply age chart. Source: Glassnode/ Twitter

At around $53,000, Bitcoin became a $1 trillion market cap asset — but this was still not sufficient incentive to awaken coins long held in storage.

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“This is pretty solid price validation; $1T is already strongly supported by investors,” statistician Willy Woo commented on Glassnode data.

“I’d say there’s a fair chance we’ll never see Bitcoin below $1T again.”

Last week, meanwhile, Cointelegraph reported even more bullish prognoses from stock-to-flow price model creator PlanB, who forecast BTC/USD not stopping at $100,000 and continuing to an average of $288,000 this year.

Exchange reserves back near record lows

It’s not about well-known names that want to keep playing. According to exchange numbers, the average hodler is in it for the long haul and has no plans to sell.

Inflows and outflows to major trading sites are overwhelmingly biassed in terms of withdrawals, according to on-chain resource CryptoQuant, reflecting a lack of appetite to sell or trade on short notice.

Indeed, the weekend saw the biggest outflows from exchanges since early March, shortly before Bitcoin reached its latest all-time peak of $61,700.

Last week, CryptoQuant CEO Ki Young Ju included the lack of exchange inflows among factors balancing some other, less impressive, indicator readings as part of the overall market picture. Bitcoin, he said, will likely take “some time” to beat its $61,700 record.

“I think BTC would take some time to get another leg up in terms of demand/supply,” he summarized.

Bitcoin exchange netflows (green), reserves (blue) vs. BTC/USD (red). Source: CryptoQuant

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