Bitcoin volume on cryptocurrency exchanges has fallen to a 44-month low, signaling that a possible big price move is likely in the near term, either bullish or bearish.
Bitcoin leaks from exchanges
Specifically, the total bitcoin supply on exchanges currently stands at 2.4 million BTC, which at the time of the article was worth approximately $94 billion, down. compared to the peak of 3.2 million reached in February 2022. That is a drop of 202,900 bitcoins. The Bitcoin Analytics Platform Pricedinbitcoin21 posted on April 29 on his twitter a graphic showing this situation.
As the chart shows, bitcoin price movements have historically been in the opposite direction to its amount held on exchanges. Following this logic, one can expect an increase in the price if this trend continues. However, it is always complicated to analyze this type of data as we have seen in this article which predicts a surge in 2024.
This stands to reason, as crypto assets held on stock exchanges tend to fluctuate based on changes in market sentiment. In other words, assets on exchanges decrease if more market participants want to buy rather than sell, and higher demand usually leads to higher prices.
Meanwhile, a crypto market analyst believes that bitcoin is poised for an upside breakout as the correlation between the US dollar and BTC is particularly strong at the moment. According to Michael van de Poppe, bitcoin could follow the action of the dollar and move higher next week.
” I guess it will be a scenario where we buy the rumor and sell the news. I think as this event nears, or maybe in the next few days, the US Dollar will top out and then start to correct from there as the event is already priced in. We will then enter a new neutral situation in which risky assets will continue to perform well” , did he declare.
Finally, Poppe is not alone in believing that the price of BTC will rise over the next few weeks, as the crypto community, with an historical accuracy of 83%, has set a bullish bitcoin price for May 31, 2022.
Other more pessimistic predictions
Other predictions suggest the price of bitcoin (BTC) could drop 20% in the coming months, but that hasn’t deterred its wealthiest investors from piling on. We had already talked about it in this article which estimated that bitcoin could fall to $27,000.
The amount of bitcoin held by “unique entities” with a balance of at least 1,000 BTC, or so-called “whales,” has increased to its best levels since September 2021, according to data from Glassnode.
Interestingly, the number over the past week has increased despite bitcoin’s price dropping from $43,000 to around $38,000.
Interestingly, bitcoin’s fall mirrored similar bearish moves in the US stock market, with its correlation to the tech-heavy Nasdaq Composite hitting 0.99 in mid-April. An effectiveness value of 1 shows that the two assets have evolved in perfect tandem.
” You should think of this high correlation as a gravitational field pulling on bitcoin price“, says Nick, an analyst at data resource Ecoinometrics. He adds :
” If the Fed sends the stock market into a black hole, don’t expect bitcoin to escape a major crash“.
Bitcoin therefore remains in a very complicated area to analyze. However, the macroeconomic elements are quite pessimistic. The war in Ukraine and inflation continue to rise and for the moment it is impossible to foresee a solution to these problems. The simplest thing is to Hodler and wait for the wave(s) to pass!
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Bitcoin (BTC) Number Hits 44-Month Low on Stock Markets
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