June 9, 2021

When Bitcoin Will Switch Back to an Upturn Trend

According to research by Santiment analytical service, the largest holders of the main cryptocurrency continue to accumulate digital coins.

According to Santiment analytical service, since June last year, the activity of Bitcoin addresses dropped to its lowest. According to the site, for the past two and a half weeks the major holders of the main #cryptocurrency continue to accumulate digital coins while whales have been showing growing interest in Bitcoin. The number of digital coins on crypto exchanges continues to decline after the drop in quotes that too place May 19.

“Whales seem to be buying this drop with confidence,” the Santiment report states.

According to the information provided by the analytics platform Glassnode, the largest outflow of Bitcoins from crypto exchanges since November 2020 was recorded on June 7 when, over 24 hours, 22,500 digital coins (worth $744 million) were withdrawn from the exchanges.

The major #Ethereum holders also continue to accumulate altcoins. This trend has not changed since October last year. Ethereum address activity continues to decline since the surge seen in mid-May. At the same time, negative social trends of Ethereum decreased to the level of October 2020.

Digital coin holders are looking forward to the next big #Bitcoin move, but the long-term model of altcoin accumulation still looks optimistic, analysts say.

"It Is Too Early to Talk about a Long-Term Correction." When Bitcoin Wil Switch Back to an Upturn Trend

On the morning of June 8, the price of Bitcoin dropped to $32,300. Over one day, the price of the main cryptocurrency dropped by 10%, and its capitalization fell to $622 billion, according to CoinGecko. This happened after billionaire and former US President Donald Trump criticized the digital coin and called it a scam. The businessman urged the US authorities to "very tightly" regulate the circulation of digital currency in the country.

Restrained Fall

Given the current information background, the drop of the Bitcoin rate looks quite restrained. In addition to Trump's statement, the quotes were pressured by the news of the interception by FBI of a virtual Bitcoin wallet used by the DarkSide hacker group after the attack on the Colonial Pipeline, as well as messages about the intentions of the US authorities to introduce stricter cryptocurrency regulations.

It is too early to talk about a long-term correction, since from a technical point of view, for launching such a scenario, the price of Bitcoin must drop below $30,000.  In the meantime, the dynamics look just like a price surge and a short-term reaction to negative information, the expert said.

There are two possible scenarios the events may follow. The first is that Bitcoin will fluctuate for some time in the range between $35,000 - $40,000, until a critical mass of buyers is assembled. This will activate the bullish trend.

The second scenario assumes a drop in the Bitcoin rate to $20,000 - $25,000.

"At these levels, a rapid set of long positions may take place, which will push the quotes up and trigger the beginning of an upward trend." 

Institutional Investors’ Behavior

Remember that during a strong bull market last March, Goldman Sachs announced the launch of new investment instruments based on Bitcoin and other cryptocurrencies, as there was a high demand among customers for such products.

It would be wrong to use the word panic as far as institutional investors are concerned, since investors, despite the withdrawal of funds from products based on Bitcoin, keep simultaneously increasing investments in instruments based on altcoins, which has a positive effect on the crypto market.

On June 7, MicroStrategy announced a $400 million bond issue maturing in 2028. The company plans to use the raised funds to buy Bitcoins. The software maker is now the largest cryptocurrency holder among public companies. MicroStrategy owns 92,000 bitcoins worth $3 billion, according to Bitcoin Treasuries.

At the moment, there is a high probability of a renewal of a new all-time high for Bitcoin as the super-cycle is not over yet, and the market is somewhere in the middle of the growth that should stop closer to 2023.