Is Bitcoin Poised to Soar? Bitfinex Analysts Detect Familiar Patterns From December 2020
According to analysts at Bitfinex, Bitcoin’s recent behavior on exchanges is reminiscent of December 2020, signaling a potential growth phase. In their latest report, the exchange highlights a substantial decrease in the supply of Bitcoin held by long-term investors on centralized exchanges, reaching its lowest levels in 18 months. This trend, coupled with the upcoming halving event, suggests a favorable environment for further price appreciation.
The Bitfinex Alpha report emphasizes the diminishing inactive supply of Bitcoin, particularly those assets that have remained stagnant for over a year. This reduction implies that long-term holders are either reducing their positions or moving their assets off exchanges. Understanding these actions is crucial in analyzing Bitcoin’s price dynamics, especially as the halving event approaches.
Bitfinex analysts believe that with an increasing number of BTC leaving centralized exchanges and a decline in inactive supply, the market is primed for potential growth. They draw parallels to the conditions observed before the significant market surge in December 2020.
CryptoQuant’s data further supports Bitfinex’s observations, showing a continuous decline in Bitcoin exchange reserves since July 2021. This decline, which has seen reserves drop from 2.8 million to approximately 1.94 million, indicates an ongoing trend of Bitcoin leaving exchange wallets.
Despite these positive indicators, Bitcoin has experienced a recent price decline. Over the past week, it has dropped by over 10%, falling from over $70,000 to as low as $62,000. This downward trend has continued in the past 24 hours, with a 4.6% decrease during this period. At the time of writing, Bitcoin is trading at $62,034.
During this period of price movements, signs of panic have emerged within the Bitcoin market. The Whale Alert platform reported a significant transfer of 7,690 BTC, valued at $483 million, to Coinbase, the largest cryptocurrency exchange in the United States. While details about the origin of the address remain undisclosed, such transfers to exchanges often signal potential intentions to liquidate holdings, indicating a readiness to sell off assets within the crypto sphere. If the entity responsible for this transfer decides to sell off the entire deposited BTC, it could exert a notable influence on the broader Bitcoin market.
It’s important to note that investing in cryptocurrencies carries risks, and this article is provided for educational purposes only. As always, conducting thorough research before making any investment decisions is recommended.