Bitcoin has reclaimed the current range’s highs. At the time of writing, the first cryptocurrency by market size is trading at $41,300, with a daily profit of 6% and 23.8 percent.
According to Glassnode data given by Moskovski Capital’s CIO Lex Moskovski, the quantity of Bitcoin held by “strongest holders” has increased. These holdings have climbed to an all-time high, according to the Illiquid Supply measure, implying “bullish” price action.
The Fundamentals of Bitcoin Have Turned Positive, and the Bulls Have Regained Control?
Edwards looked at other metrics, such as the Hash Ribbons measure, and thinks it’s “promising.” After China prohibited Bitcoin mining, the measure experienced a significant drop. Miners were forced to relocate to more hospitable environments.
The hash rate of Bitcoin has been increasing, as has its Energy Value. Edwards discovered that each of these metrics increased by about 8%, suggesting that the miners’ exodus had come to a stop. Another optimistic aspect is that since these businesses can no longer sell BTC, the market may face less selling pressure. Investors, on the other hand, must exercise caution:
Hash rate is showing a positive and strong trend, not dissimilar to December 2018, suggesting the bottom could be in. However, Hash Rate can give various false positives during capitulation. This is why we remain cautious until the Hash Ribbon buy signal is confirmed.
Bitcoin may see further accumulation around its present levels in the next days, with a “greater possibility” of another move up to the mid-range, $45,000. The invalidation zone for BTC is $39,000 if it retraces.
The macro-economic outlook presents a potential tailwind and risk for Bitcoin. Edwards claims that the U.S. Federal Reserve and its inflationary monetary policy could continue to boost BTC if the financial institution keeps printing money.
There is a potential risk in the traditional market. If the stock market crashes, Bitcoin could follow. The cryptocurrency has displayed a high level of correlation with the S&P 500. In consequence, it could hurt its chances to reclaim previous highs in case of a dropped. Edwards concluded:
For now, fundamentals and technicals are skewed towards the upside, and our base case is we will move towards the mid- to high-$40Ks over the coming weeks. In the near-term this thesis would be validated if we breakdown below $39K. Finally, Bitcoin cycle history tells us to be wary of significant volatility and downside risk until conditions are further improved.
