Bitcoin seems to have hit a "ceiling" after reaching its peak. How could it push forward with its bullish trend?
CryptoQuant, a cryptocurrency on-chain data firm, shared a report from the analyst known as Crypto Dan on what is needed for bitcoin (BTC) to resume its upward trend.
"It's time to wait until the purchasing power of US institutions and whales increases," he explains. Currently, these players, who move large volumes driving price movements, are reducing their purchases. This is illustrated by the metric called Coinbase Premium GAP displayed below.
This metric reflects the gap between the price of bitcoin in US dollars (USD) on Coinbase Pro and in tether (USDT) on Binance. When its value rises, it indicates that whales are increasing their purchases. Conversely, when it falls, as is happening now, it suggests that demand has decreased or they are selling coins.
It's worth noting that "whales" refer to large investors, such as institutions, who own more than 1,000 bitcoins. Coinbase Pro caters to these types of actors, which sets it apart from Binance, targeting a retail audience. Therefore, their platforms are key in identifying market movements.
According to the analysis, "given Bitcoin's rapid rise in recent months, it appears that the correction period will continue for some time." However, it warns that this scenario may conclude before the midpoint of the year.
"It seems likely that before the end of the first half of 2024, we will see the market rise again, with purchases from US institutions and whales leading to an increase in Coinbase Premium," it concludes.
This scenario unfolds as Bitcoin undergoes a correction period after reaching a new all-time high (ATH) last week, nearly hitting $73,800.
Macroeconomics drives whale investment
Expectations for an increase in the purchasing power of institutions and whales, which could drive Bitcoin buying, are based on favorable macroeconomic data for this year. The US Federal Reserve (Fed) kept interest rates unchanged and reiterated its commitment to reduce the country's annual inflation to 2% after reaching 3.4% in its latest reading.
"Economic activity continued to expand at a solid pace. Employment growth remained strong, and the unemployment rate stayed low," the Fed stated in its rate decision on March 20th. Additionally, there was an expectation to lower rates amid a trend of lower inflation.
Economic growth and lower inflation, leading to a potential decrease in interest rates, set a positive stage for financial markets. This implies more capital for institutions and whales, which could flow into risk assets like Bitcoin.
Moreover, favorable winds for markets are not limited to the US economy. According to the Organization for Economic Cooperation and Development (OECD), the global economy is rebounding better than expected a few months ago. This trend is expected to continue moderately, with overall inflation continuing to decline.
Meanwhile, Argentina, which closed last year with the highest annual inflation in the world, is experiencing a decrease in monthly inflation, coinciding with an increase in demand for Bitcoin. According to the local exchange Lemon, Bitcoin buying volumes are close to reaching their highest weekly level in 20 months.
This context arises two months before the launch of Bitcoin exchange-traded funds (ETFs) in the United States, leading to increased demand for the digital currency among traditional and institutional investors. As reported by CriptoNoticias, experts like entrepreneur Samson Mow argue that Bitcoin could reach $100,000 this year given the current circumstances leading up to the halving.
The halving is an event that halves Bitcoin's issuance every four years, with its next edition scheduled for April 2024. This event reduces miners' pressure, potentially leading to a price increase due to reduced supply.