BTC Holders Reduce Spending, Why Bitcoin Could Get More Rocket Fuel
26 Ottobre 2021 - 12:22AM
NEWSBTC
Bitcoin trends to the upside in the daily chart after experiencing
some downside action during the weekend. As of press time, the
benchmark crypto trades at $63,136 with a 3.8% profit in the
24-hour chart. The rally has been driven by an increase in
institutional demand as the first Bitcoin-linked Exchange Traded
Funds (ETFs) in the U.S. have been rollout. Both products
experienced a record in trading volume with ProShares’ product
surpassing the launch of the Gold ETF by reaching $1 billion in
less than 3 days. $BITO just about at $1b in total volume today
(curr $993m but trades still trickling in). Easily the biggest Day
One of any ETF in terms of 'natural' volume. It also traded more
than 99.5% of all ETFs (incl some bigs like $DIA, $ARKK, $SLV). It
def defied our expectations.. pic.twitter.com/rWIPSAJboT — Eric
Balchunas (@EricBalchunas) October 19, 2021 This propelled the
Chicago Mercantile Exchange (CME) Open Interest to the stratosphere
setting a new all-time high of $5.44 billion for futures contracts,
a report by Glassnode indicated. The CME OI has risen by over 265%
in October 2021 alone, as seen in the chart below. Related Reading
| TA: Bitcoin Price Faces Hurdle, Why 100 SMA Is The Key The
derivates market has been heating up across the board with the
funding rates going positive as Bitcoin moves higher. This has
triggered a FOMO effect which led to a correction as over-leverage
traders were shaken out in the past days. Bitcoin seems to be
making quick recoveries and holding on to $60,000 as critical
support, but as Glassnode noted an over-heated futures sector put
the entire market at risk of further downside price action. (…)
funding rates remain at similar levels as observed just prior to
the early September flush out. With futures open interest remaining
near all-time highs, a risk of further downside to clear even more
leverage does remain in play. Bitcoin Investors Expect More Gains
In support of the current optimistic general sentiment in the
crypto market, Glassnode noted a reduction in activity by long-term
holders. These investors were taking profits for the past 2 weeks
following a period of accumulation. Related Reading | Is China
Considering Lifting The Bitcoin Mining Ban? The NDRC Runs Public
Survey As the research firm explained, Bitcoin long-term holders
(LTH) exhibited a typical behavior as BTC’s price entered price
discovery. As the chart below shows, there seems to be an inverse
correlation between the total BTC supply held by LTHs and the price
of this cryptocurrency. Whenever there is a reduction in LTHs
spending, the price of Bitcoin tends to the upside in a massive
rally as seen in late January and early February 2021. Related
Reading | On-Chain Data Shows Surge In Stablecoins Supply
Pouring Into Bitcoin When combining the behavior of LTHs, already
resuming their BTC accumulation, with that of Short-term holders
(STH), Glassnode concluded that the overall sentiment is for
Bitcoin to reach new highs: (…) STHs have stopped spending during
this correction. With LTH supply already starting to recover, the
most likely interpretation is that the vast majority of coin
holders are still expecting and waiting for higher prices.
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