Bitcoin has witnessed a remarkable surge in price, soaring from $60,000 to approximately $66,000, according to recent insights provided by CryptoQuant. This upward movement can mainly be attributed to the lower-than-expected US inflation rates and a significant decrease in selling pressure within the market.
A crucial factor contributing to the surge in Bitcoin’s price is the behavior of short-term holders, as highlighted by CryptoQuant. These investors have been offloading their holdings at low or even negative profits, resulting in an overall reduction in selling pressure. Additionally, many traders have exhausted their unrealized profits, further contributing to the current stability in the market.
Furthermore, the balances of Bitcoin at over-the-counter (OTC) desks have stabilized, indicating a decrease in the supply of Bitcoin entering the market. This stabilization is a positive indicator for the price as it suggests that fewer Bitcoins are being sold off. Moreover, Bitcoin miners are facing extremely low profitability, a condition that historically aligns with price bottoms. This low profitability among miners may also have an impact on the current price dynamics.
While the demand from permanent holders and large investors has shown signs of stabilization, according to CryptoQuant, it is crucial for this demand to accelerate in order for the rally to be sustainable. The involvement of these major market participants plays a critical role in maintaining the upward momentum of Bitcoin’s price.
Despite the positive price movement, there are certain areas of concern that could potentially affect the sustainability of this rally. The purchases of ETF Bitcoins remain minimal, indicating that institutional interest through this channel has not yet picked up. Additionally, the growth of stablecoin liquidity, which is essential for providing the necessary market liquidity for further price increases, is still slowing.
In conclusion, Bitcoin’s recent rally to $66,000 has been driven by a combination of reduced selling pressure, stabilization in supply, and the influence of macroeconomic factors such as US inflation rates. While the current market conditions are favorable, the future trajectory of Bitcoin’s price will heavily depend on the acceleration of demand from long-term holders and large investors, as well as improvements in ETF purchases and the growth of stablecoin liquidity.