Bitcoin Market Update: Three triggers that may send BTC to the moon
|- Bitcoin (BTC) has been range-bound with a bearish bias on Thursday
- A new bullish cycle may be just around the corner.
Bitcoin (BTC) is changing hands at $11,380 with the short-term bearish sentiments gaining traction. The First digital coin attempted a recovery above $11,400 and hit the intraday high of $11,486 during early Asian hours; however, the upside momentum proved to be unsustainable. Bitcoin's dominance rate settled below 59%, while the number of profitable Bitcoin wallets decreased to 85% from over 90% recently.
While in the short-rum Bitcoin looks like a disappointment, longer-term perspectives still imply significant growth that may start before the end of this summer. Here is five factors that may become a trend-changing trigger for BTC in the nearest future.
The number of Bitcoin whales at a record high
The number of large Bitcoin holders with over 1000 BTC also know as whales increased to 2,088, which is a new all-time high. The population of whales started growing in numbers soon after BTC hit the lowest level of 2020 at $3,600 and the market is still in the accumulation phase.
In the past six years, Bitcoin demonstrated periods of strong correlation with the number of whales where the price dropped together with the number of addresses holding substantial amounts of BTC. If the history of any guide, the market will go higher as long as the accumulation phase is active and whales believe that Bitcoin retains the upside potential.
Stablecoin lay the ground for Bitcoin's price increase
Stablecoin supply ratio (SSR) implies that Bitcoin is grossly undervalued at $11,400, according to Glassnode analysts who use this metric within their BTC/USD forecasting model. Experts noticed that now it is three times higher than in July 2019 when BTC also reached current price levels.
SSR reflects how much Bitcoin's stablecoin owners can buy at a current price. Thus, when BTC is cheap, their potential purchasing power increase. As the price grows, stablecoins can buy less of the BTC supply as their price is pegged to a fiat currency or other asset.
The current Stablecoin Supply Ratio (SSR) indicates a high buying power of stablecoins over #Bitcoin – and therefore an increased potential for an upwards movement of $BTC. SSR is 3x stronger than it was when $BTC hit these price levels over a year ago.
FED is going to pump BTC
The financial markets are waiting for Federal Reserve Chairman Jerome Powell’s comments on the state of the US economy and the monetary policy. The expectations are that he will confirm the current zero-interest policy stance. The officials have already mentioned that they are ready to tolerate periods of higher inflation to make up for the periods of low inflation. The market will scrutinize Powell's comments for clues of what to may come.
The inflation topic is, in my mind, is one of the most crucial themes that’s currently around. A change in how the Fed targets inflation may enable the central bank to keep stimulus programs going for longer, even as the economy eventually heats up and prices rise, Peter Schaffrik, a global macro strategist at RBC Capital Markets commented as cited by the Wall Street Journal.
The cryptocurrency community believes that FED's inflationary policies will eventually become a big booster for Bitcoin as a store of value and a hedge against inflation.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.