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With Bitcoin up 37% since October 1, 2021, BTC’s trajectory in Q4 appeared to be promising. BTC’s candles on the daily chart have been closed in green for more than ten days. The market’s expectations for the coin increased as the asset traded at $56.5K.
However, as the top coin saw this kind of price growth, it wasn’t just price anticipation that changed; BTC’s status as an asset seemed to be repositioning as well.
Supply shock narratives
One striking trend about this cycle was that the aggregate Bitcoin balances on the exchanges were on a downtrend since the end of July. In the past, BTC exchange reserves saw new lows, alongside the coin’s ATH prices.
Indeed, as new addresses were being added, outflows peaked, and prices rose, the market was flooded with positive supply shock narratives. While a supply squeeze on exchanges cannot be ruled out, BTC leaving exchanges and hopefully ending up in self-custody was a very positive development.
Holders HODLing the wave
As Bitcoin ended the weekend above $56.3K, data analytics site Santiment iterated how the market continued to be a whales’ market. Notably, addresses with 100-1,000 BTC accumulated 85.7K BTC around late September, 2021.
These whales held 21.3% of the supply now, which is largest of all time. This section of investors finally erased the whole slump and broke out after a five-month-long consolidation.
Further, the percentage of coins last active within the previous three months was at a historic low, never seen before. This behavior was indicative of the shift in the macroeconomic environment while presenting high HODLing behavior.
That, coupled with institutional money coming in, Bitcoin seemed to be arguably establishing itself as a potential safe-haven asset. In fact, BTC’s Sortino ratio which can be interpreted as the actual rate of return in excess of the investor target rate of return per unit of downside risk was arguably close to that of Apple’s. Notably, BTC’s Sortino ratio at the time of writing was 0.021113 while that of Apple was 0.0709.
Looking at BTC’s supply-demand dynamics, with its supply on exchanges decreasing, are people realising that Bitcoin is more than just a speculative asset to be flipped short-term, but also something to hold onto long-term?
With institutional money coming in and plans for a BTC ETF looking solid, there have been significant shifts in BTC’s macroeconomic environment.
All of these factors, combined with reduced supply and potentially increasing demand, suggest that the paradigm shift is massive, and Bitcoin may be in for some exciting moves in the coming months.
But, as unpredictable, and sensitive to external news, as BTC is, one thing was sure – Q4 could make or break the top coin’s case in macro-terms. Either way, it’s going to be a rather interesting time to witness its moves.