Bitcoin’s Illiquid Supply Continues to Grow – What This Means

Bitcoin’s uptrend is currently slowing as the leading cryptocurrency has been down by 10.47% in the last 24 hours, trading at $45,213 at the time of writing, according to CoinMarketCap. This outcome is linked to the fact that risk assets are experiencing a global sell-off, and bond yields are surging on the expectation that inflation will continue to rise.

Nevertheless, crypto trader Carl Martin tweeting under the pseudonym The Moon believes that Bitcoin (BTC) may be getting ready for a monumental move because the present price correction may a temporary pullback before the cryptocurrency surges higher.

BTC is not a stranger to numerous steep pullbacks in a bull run, as acknowledged by Bloqport. The crypto data provider explained

“Historically, Bitcoin goes through multiple steep corrections in a bull run. Between 2016 to 2017, we saw at least six. On Nov 13, 2017, BTC hit a low of $5,844 then hit $20,000 34 days later.”

The crypto trader, therefore, believes that the present price consolidation could trigger a monumental move.

Growing illiquid Bitcoin supply – what this means

Martin’s sentiments are echoed by on-chain analyst Rafael Schultze-Kraft who disclosed that Bitcoin’s liquid supply is nosediving. This can be interpreted as a bullish signal. He explained:

“The amount of illiquid Bitcoin supply in the network has grown more than the circulating supply since 2017. Meanwhile, liquid supply continues to see a steep decrease. Pair this with the demand from MSTR, Square, Tesla, Grayscale, et al., and understand how bullish this is.”


Source: Glassnode

Illiquid BTC supply signifies a holding culture as more participants are storing Bitcoin for speculative or future purposes, which is an indication of bullish behaviourr. 

Jan & Yann, the co-founders of on-chain data provider Glassnode, have also delved into the issue of the current pullback being bullish. They said

“Confidence in the continuation of the Bitcoin bull market during this pullback seems to be higher than for the previous dip in Jan. This chart is a great proxy for long-term holders’ sentiment.”


Source: Glassnode

Time will tell how the leading cryptocurrency moves from here. Bitcoin billionaire Tyler Winklevoss has hinted that the current price of $45k “smells of opportunity,” perhaps suggesting that this is the optimal time to buy the dip and purchase BTC at a lower price.

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The Crypto Market is Experiencing a Healthy Price Correction Needed Before Surging Higher, says Spartan Group Partner

The crypto market has been riddled with activities after its market capitalization surpassed the $1 trillion mark. Nevertheless, a looming correction was bound to happen as it lost nearly $170 billion in a span of 24 hours, and its value diminished to $943.57 billion. 

This price action in the crypto market has been depicted as a healthy correction, triggering more good than harm, by a partner at The Spartan Group, an advisory firm and crypto fund. He noted:

“This healthy correction is good for crypto markets. It affirms the trend of past cycles. It washes out the leverage that has been building in the past few weeks and sets the foundation for the next move higher. Make sure you take advantage of this correction.”

The partner, tweeting under the pseudonym SpartanBlack, believes that the current price retracement will be instrumental in triggering an uptrend as past leverage will be washed out. He advises investors to take advantage of the correction and to buy the dip.

The crypto market looks set for a bounce-back

The present correction saw leading cryptocurrency Bitcoin (BTC) tumble to a low of $32,829 from a high of $41,500, and greed may be a factor explaining the price plunge, as the market is seen as overleveraged at the moment and investors have bought the dips below the $39K mark in fear of missing out (FOMO). By selling their funds shortly after BTC hit its record high however, this has caused the mainstream cryptocurrency’s price to plunge.

Nevertheless, BTC has gained 17.07% in the last one week to push its price upwards to $36,121 at the time of writing, according to CoinMarketCap

Ethereum (ETH) and Ripple (XRP) have also experienced a price surge by gaining 9.85% and 14.53%, respectively, in the last 24 hours. The market capitalization of the crypto sector may be a stone’s throw away from recovering and hitting the highs of more than $1 trillion that it experienced previously, as it is now hovering around $989.42 billion. 

The crypto market, therefore, looks like it will be back to winning again. These sentiments are echoed by Alex Saunders, the CEO of NuggetNews. He acknowledged:

“Retail has arrived. PayPal cleared $242M in crypto sales yesterday. That’s nearly double the previous record.”


Time will tell what the crypto market has in store moving forward. 

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Anthony Pompliano Says Bitcoin Price Correction Indicates BTC has Moved from Weak to Strong Hands

Bitcoin bull and the co-founder of Morgan Creek Digital Hedge fund, Anthony Pompliano has noted that the ongoing price correction of BTC is a signal that Bitcoin is moving from weak hands to strong hands per a Twitter post he shared.

Bitcoin moved from weak hands to strong hands

Bitcoin has impressed the world with its recent price performance which broke several all-time highs in the past couple of weeks, peaking at around $42,000 per coin. The growth which started last year has been reportedly fueled by a massive embrace of the coin by Wall Street firms including online payment giant PayPal Holdings Ltd, business intelligence firm MicroStrategy Incorporated and Grayscale Capital to mention a few.

The massive buy-up of Bitcoin by these firms made the headlines which thus made investing in the coin more attractive and retail investors also joined the train in a bid to kill their FOMO. The combined bullish actions of both the institutional and retail investors kept Bitcoin high above $38,000 for a while, a price territory that is now currently threatened.

As Bitcoin moved by about $20,000 in less than a month, many Bitcoin holders have seen gains in their holdings and the price dip can be attributed to a sell-off by those investors who are taking profits from the coin. Pompliano however believes that as many of these sellers ditch their crypto holdings, it goes to the hands of investors who see a bigger move in the future and are thus taking advantage.

Pompliano wrote in a tweet: 

“Bitcoin moved from weak hands to strong hands today”

How Big Will This Ongoing Correction Be?

While Bitcoin is renowned for very wild price swings, it may be hard to project how big this ongoing correction will be. For the previous ATH broken by BTC back in December 2017, the coin swung from above $19,000 to below $10,000 in the same correction as what we are seeing. How far this dip will go is perhaps what many sellers are unwilling to witness, and what many others see as an opportunity to buy up more coins.

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Bitcoin Price Is Approaching Euphoric Levels as Addresses with More Than 1000 BTC Hit All-Time High

Wild price swings have seen Bitcoin (BTC) breach the $40,000 for the first time in its twelve-year history.

Currently, the largest cryptocurrency by market capitalization has retracted to $38,647 at press time. This bull run has seen BTC skyrocket by nearly 952% since it plummeted to around $3,800 in March last year, as the grappling effects of the coronavirus (Covid-19) continue to wreak havoc globally.

Market insights provider Unfolded has, however, noted that caution should not be thrown to the wind because currently, BTC’s levels are euphoric, and a downward push may be inevitable. The data analyst noted:

“Bitcoin is approaching euphoria/greed levels.”


The analysis shows that a price correction is imminent, as echoed by Panxora Group CEO Gavin Smith, who noted that it is not possible for BTC’s price action to move in a straight line. He said:  

“While further growth is inevitable, investors should not expect this to move in a straight line. The reality is that bitcoin is far from being a magic money tree, nor is it free from downward price swings. In fact, we can expect dips as sharp as 25% at times as investors periodically withdraw profits.”

BTC addresses with more than 1,000 coins hit ATH

The current bull run has seen Bitcoin soar to levels not seen before as more participants jump on the BTC bandwagon. For instance, on-chain analytic firm Glassnode has said:

“Number of Bitcoin addresses holding 1k+ coins just reached an ATH of 2,376.”

Despite the looming price correction that Bitcoin may undergo, crypto analyst Michael van de Poppe believes that the present bull cycle will be larger than expected. He stated:

“The entire bull cycle we’re experiencing now will be way larger than anyone is expecting it to end too. Just like the $20,000 peak high was way higher than everyone expected in 2016/2017 to be the top on Bitcoin. That’s how markets work.”

His sentiments come a day after the economist and crypto trader Alex Kruger revealed that Bitcoin is likely to never trade below $20,000 again as market corrections are expected to happen, which will mean that sharp price corrections will happen. 

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Grayscale Bitcoin Trust Inflows Estimated at $1 Billion per Month – Why It Matters for BTC

Bitcoin whale support has definitely been a major factor fueling Bitcoin’s rally to $24K, but it appears that the cryptocurrency may now be in overbought territory.

Bitcoin held up amid a flow of US dollar bills

According to JPMorgan Chase analysts, the cryptocurrency’s value has tripled in 2020 alone, with many large-scale institutions backing the digital currency heavily and diversifying their treasury reserves with Bitcoin. Among the corporations backing BTC, Grayscale Bitcoin Trust figures among the leading ones, with its crypto assets under management topping $13 billion. For just Bitcoin alone, JPMorgan Chase’s head strategist Nikolaos Panigirtzoglou shared with Bloomberg that inflows into Grayscale’s Bitcoin fund were estimated at about $1 billion per month. If the funds entering the cryptocurrency fund slowed down, this would increase the likelihood of a Bitcoin price correction.

Implications that Bitcoin is currently in the overbought territory may result in a harsh correction of its price somewhere down the line. However, it may be too early to call it, as strategists have asserted that the funds pouring into Grayscale’s fund are too sizeable at the moment for any traders to reverse the Bitcoin price dynamics. They said:

“The flows into the trust are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics.”

While some have argued that Bitcoin’s price run is sustainable this time around, as it has been fueled by the belief that it is a safe haven asset in times of high inflation and economic turmoil, others have said that Bitcoin will likely undergo a price correction and retrace, if previous statistics were an example and history was to repeat itself.

In 2019, what happened to Bitcoin was that on a yearly perspective, the cryptocurrency doubled in value. Nonetheless, it underwent a huge price correction and plunged by 44% in late June.

Bitcoin’s quick ascent to its all-time high has got investors speculating that it may likely undergo a huge price correction, as its price run becomes unsustainable. According to Bitcoin trader Tone Vays, if Bitcoin was to hit $30K by the end of this week, this may end badly for the cryptocurrency, as historically speaking, Bitcoin’s price spikes have always been accompanied by its downfall.

Currently, Bitcoin shows no signs of consolidating, trading shy of $24K.

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Bitcoin (BTC) $ 25,732.89 5.16%
Ethereum (ETH) $ 1,810.75 4.19%
Litecoin (LTC) $ 87.97 6.96%
Bitcoin Cash (BCH) $ 109.06 5.64%