Five key fundamental factors denote that Bitcoin is putting together for an extended uptrend by 2021. The price of Bitcoin (BTC) has been flourishing in between the ranges $8,600 and $10,000 for the last two months. BTC has been showing some volatility since May after a crucial rejection at $10,440.
Five key fundamental factors denote that Bitcoin is putting together for an extended uptrend by 2021. The price of Bitcoin (BTC) has been flourishing in between the ranges $8,600 and $10,000 for the last two months. BTC has been showing some volatility since May after a crucial rejection at $10,440. Nevertheless, there are five major fundamental factors which could lead to an extended uptrend by 2021.
Based on the data from Skew, the 10-day realized volatility of Bitcoin decreased down to the lowest level of the year on June 24. This proves that the traders are taking precautions as BTC is at a crucial price point. The performance of BTC over the upcoming weeks could indicate the price trend throughout the years end. Basically, the sentiment of cryptocurrency traders on the medium-term outlook of Bitcoin remains optimistic. In the short-term analysts analyse try to learn about the weakness of BTC and other top cryptocurrencies due to external factors like the Covid-19 pandemic.
In the near future, strong macro factors mention BTC is on track for a firm recovery. The most important piece of information that justifies predictions of an optimistic trend is in the increase in “HODling” activity among investors. Rafael Schultze-Kraft, the chief technical officer at Glassnode, shares details about different HODling data and how there has been an increase in investor confidence. Let’s begin with Bitcoin’s supply which has not been changed for over a year has reached an all-time high, standing at 61%. It illustrates the shortage of appetite to sell BTC at the current price level. Shultze-Kraft says, “First, the obvious one: 61% (!) of Bitcoin supply that hasn’t moved in over a year that’s an all-time high. Moreover, 44% hasn’t moved in 2+ years (approaching ATH), and almost 30% hasn’t moved in 3+ years. Loads of hodling here.”
Shultze-Kraft further pointed out that a metric called “HODler Net position change” shows investors total Bitcoin heavily in 2020. The data shows the disinterest of many retail investors to sell BTC, pointing out that: “There have been only 16 days since the beginning of this year, in which the BTC Hodler Net position change has been negative.” If the BTC HODler net position continues to be optimistic, then it proves that investors are not shifting funds from personal wallets to exchanges to sell. In March 2020, the price of Bitcoin went below $3,600 on many important future exchanges.
Altana Digital Currency Fund chief investment officer Alistair Milne mentioned that if this drop could not break investors confidence them there are not many possible factors which could in the near future. Milne stated: “Similar levels of HODL last seen during a 3-month consolidation at around $400 before starting a two-year bull run…Guesstimate that this cycle will peak around 70%?”. Usually, the bull runs in the cryptocurrency market joined with an increase in HODL activity. During the start of 2018, the “HODL wave” of Bitcoin began to rebound. From March to July of that year, BTC rose from around $4,000 to $14,000. According to Philip swift, the creator of cryptocurrency market data platform lookintobitcoin.com, stated: “Such high levels of HODling have been present at the start of previous Bitcoin bull runs.”
Since March 2020, the assets under management of the Grayscale Bitcoin Trust increased from $1.577 billion to $3.541 billion. The sudden increase in AUM proves that a somewhat same accelerating demand from institutional investors. Most importantly, United States institutions have a short selection of investment vehicles which could be utilised to gain exposure to Bitcoin. With the lack of an exchange-traded fund, the grayscale Bitcoin trust will most probably remain the go-to vehicle for institutional investors.
The AUM of the Grayscale Bitcoin Trust reached an all-time high while the price of Bitcoin is down by more than 50% from its record high is seen as a positive mark. This proves that institutions have trust in the long-term trend of BTC, which is more than they did three years ago. Messari researcher Ryan Watkins, states that grayscale buying most of the Bitcoin is newly mined and can be inflated. Watkins says Grayscale only bought around 31% of newly mined Bitcoin ever since May 11: “Grayscale buys way less Bitcoin than many would think. Factoring in ‘in-kind’ purchases, Grayscale has only bought 31% of all new Bitcoins mined since the halving, far less than the 150%+ many have reported. This is just one of many misconceptions about Grayscale’s trusts.” Analysts believe that it is important to consider numbers which could actually increase the actual figures of the trust, in totality 31% of mined Bitcoin is still a substantially a high number.