June 26, 2023
Bitcoin's Growing Illiquidity Adds to Its Bullishness
Dear Subscriber,
 |
| By Marija Matic |
After an impressive rally last week that saw Bitcoin (BTC, “A-”) reach above $31,000 — its highest price of 2023 so far — the market leader closed the week slightly beneath its resistance level of $30,500.
A close above this level would have meant a tremendously bullish continuation to the run. But in this case, there is a possibility of seeing a healthy correction before the rally continues.
Even though $30,500 is a tough resistance level — one that needs to be confidently turned into a support before we can expect any additional bullish action — the greedy sentiment is back in the game.
Two weeks ago, I wrote that despite BTC breaking below important support levels, it still traded in bullish flag formation, seen in the orange lines below.
Now, Bitcoin has broken above this bullish formation, which means the pattern played out perfectly. The strong impulse had also brought BTC back above its 200-week moving average.
Even though BTC closed right below an important resistance level on Sunday, it still made a higher high, which is good. Now, it needs to confidently reclaim $30,500 before it can aim for higher levels, such as $32,000 and $36,000.
And there is plenty of additional bullishness for Bitcoin outside of price action.
First is the fact that institutional investors are back with more confidence than they had in the past 11 months!
Crypto investment products saw the largest weekly inflow since July 2022, totaling around $200 million. This corrected almost half of the prior nine consecutive weeks of outflows.
Also, there are very few Bitcoin lying around on exchanges. Only 2.27 million BTC are available on exchanges, which is the lowest amount over five years.
This is due to record-breaking withdrawals to wallets in recent weeks, proving that investors intend to hold their Bitcoin rather than trade or sell it.
This means that out of the 19.41 million BTC in existence, only 11.69% is fairly active, which is a ridiculously low amount. So-called “spendable” BTC is even lower. This “hot supply” may be as low as 3.5%, according to Glassnode data.
HODLing also remains the primary market dynamic across the band of long-term holders. Roughly 68.9% of the Bitcoin supply was last active over one year ago. And over 40% hasn’t been moved for over three years, according to on-chain data.
Finally, BTC dominance is quite high with room to grow further. While this may put most alts on hold with the exception of a select few strong projects, I’m still optimistic over Bitcoin’s recent bullishness.
Notable News, Notes & Tweets
What’s Next
The Relative Strength Index indicator is extremely overheated, which means that BTC is overbought. So, it wouldn’t be out of the question to see a healthy pullback before the breakout.
Still, Bitcoin’s chart remains very bullish, with the current support at $29,500.
Meanwhile, while constant demand is, indeed, required to sustain the rally, Bitcoin’s growing illiquidity is in line with the starts of all previous bull markets.
Best,
Marija
Tidak ada komentar:
Posting Komentar