Why Bitcoin Could See A 2020 Like Rally
29 Marzo 2022 - 1:40AM
NEWSBTC
After a rough couple of months, this week started with a strong
upward movement from Bitcoin as the coin broke out above the
$45,000 level on Monday to $48,215 before fluctuation, thus erasing
yearly losses and anticipating a $50,000 target. Despite the
decline over the year, a large amount of the coin was never sold. A
scenario that shows how holders strongly believe in the long-term
game and remain surprisingly calm over a period of turmoil.
Building Up To A Rally Senior Analyst Dylan LeClair noted that, as
Bitcoin is trading at around $48,000, “there has only been one
other time that the percentage of supply that hadn’t moved in over
a year was at this level,” which was during September 2020. On the
mentioned date Bitcoin recovered from the dramatic crash of march
2020. The strong bounceback saw a 185% hike in the prices, taking
to coin to over $10,000. A high number of committed ‘hodlers’ had
also kept their BTC dormant despite the extreme swings in prices
during the year. This was followed by a performance that catapulted
Bitcoin’s reputation amongst investors as “digital gold”. It closed
the year trading at record highs of close to $30,000, outperforming
gold with an increase of 416% over the year. Brett Munster at
Blockforce Capital had also noted last week a near-record highs
percentage of the total Bitcoin supply that hasn’t moved in over a
year, further pointing out that it is growing at a much faster pace
than the last time Bitcoin was at these levels. “I expect this
number to set new all-time highs in coming weeks and months because
it’s exactly this cohort that stepped in and aggressively bought in
April and May of last year when Bitcoin’s price fell.” Related
Reading | Bitcoin Likely To Continue Upward Trajectory, Is
$50K Its Next Target? Bitcoin Derivatives Paint A New Picture
Furthermore, Dylan LeClair also noted that BTC derivatives “are
still somewhat defensive & nowhere near as risk-on as 2021
despite same price levels.” Illustrated by the following chart, the
analyst showed the movement of BTC derivatives throughout 2021
“when the price was trading at this current level.” Note that
funding rates “represent traders’ sentiments in the perpetual swaps
market,” with positive funding rates (over 0) indicating that long
position traders are dominant and negative funding rates (under 0)
indicating the opposite, CryptoQuant explains. Compared to previous
years, the BTC hourly perpetual funding rates are significantly
closer to zero. “Excessive long-biased derivative market
speculation is near non-existent currently,” says LeClair. What the
analyst is pointing out means that excessive speculation and
leverage drove the market to these price levels in 2021, and “now
its basically nowhere to be seen and bitcoin is rallying.” This
could imply that the price is now rising because of demand, not
market speculation. Similarly, in the following chart, LeClair
displays annualized perpetual future funding rates on a 24-hour
Moving Average, while adding that “Traders were paying ~100%
annualized to go long BTC early in 2021. A similar but less severe
speculative market arose in the fall. Today? Funding has been
flat/negative for most all of 2022.” “Lastly, look at the
collateral makeup of BTC derivative open interest,” LeClaire adds.
“In 2021 up to 70% of OI was collateralized with BTC. Traders were
paying outrageous rates to long with BTC collateral, leading to
massive liquidations. Now a majority of OI is collateralized with
stables.” Related Reading | TA: Bitcoin Saw Key Technical
Breakout: Big Reaction From Bulls Imminent
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