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Bitcoin held near its annual highs just below $25,000 on Monday, and the world’s largest cryptocurrency by market capitalization bounced back strong from a brief drop below $24,000 early in the session, ending the day at around $24,000. 2.0% increase. Bitcoin’s rebound and continued resilience from the $21,000s last week surprised many analysts.
Many see continued strength in the U.S. dollar, U.S. yields rising and U.S. stocks falling as traders step up tightening Fed policy, and crypto We had expected an extended pullback from recent annual highs given concerns over tightened US regulation. enterprise. That pessimism has caused bitcoin to suffer a sizeable investor outflow last week. CoinShares Weekly Fund Flow Report.
According to the report, bitcoin investment products recorded an outflow of just $25 million, taking a month-to-date flow of -$5.1 million. Meanwhile, the last week also saw a steady decline in the number of wallet addresses holding non-zero balances on the network. The number of non-zero balance addresses fell from a record high of 44.226 million on Wednesday to just under 44 million on Sunday, according to data presented by crypto analytics firm Glassnode.
That marked a decline of around 140,000 for the week, with the decline seen across major address cohorts. Addresses holding at least 0.1 BTC dropped from around 4,231,000 on Tuesday to around 4,225,000 as of Sunday. bottom. Meanwhile, the number of addresses holding at least 1 BTC dropped to around 1,500 between Tuesday and Sunday.
Outflows from bitcoin investment products usually occur when the sell off worsens and puts downward pressure on the BTC price. Non-zero wallet address number drops usually occur when the BTC price is falling, possibly causing smaller investors to capitulate. Despite this, Bitcoin is still up over 11% and currently at the $24,700 level he is up about 7% over the month.
Bitcoin’s resilience in the face of these headwinds suggests that demand is still strong enough to absorb upselling pressure from investors looking to cash out following this year’s positive price gains. For reference, Bitcoin is currently up nearly 50% year over year.
But New Address Momentum Still Positive
Analysts probably don’t read much of the recent decline in non-zero addresses, even when Bitcoin prices are performing as well as they have lately.
Glassnode’s New Address Momentum indicator, which tracks the 30-day and 365-day moving averages (DMAs) of new addresses (thus providing a higher confidence signal), indicates that the Bitcoin network’s address trend remains positive. suggests that
The new address 30DMA surpassed 365DMA early in Q4 2022 and has continued to climb since then. “Healthy network adoption is often characterized by an increase in daily active users, an increase in transaction throughput, and an increase in demand for block space (and vice versa),” he explains Glassnode. .
When monthly (30DMA) exceeds yearly (365DMA), this “indicates an increase in on-chain activity typical of improving network fundamentals and increasing network usage.” As a result, it is perhaps not surprising that Bitcoin bull markets often coincide with times when his 30 DMA for new addresses has risen and is now above his 365 DMA.
Here’s where the BTC price could go next
Some analysts attributed Bitcoin’s recent strong performance in the face of US regulatory and macro concerns to optimism over recent developments in Asia. Since emerging from its stifling Covid-19 zero policy, China has pumped liquidity into financial markets this year. The PBoC has injected a whopping 835 billion yuan of his money into the banking system via reverse repos. This is his biggest move in over a year.
And people aren’t just excited about the easing of liquidity conditions in Asia. Hong Kong has openly expressed its desire to become a global cryptocurrency hub and on Monday proposed a new law allowing retail investors to trade high-quality cryptocurrencies on licensed exchanges. This is in stark contrast to China, where all retail cryptocurrency investments are banned.
Analysts theorize that China is using Hong Kong as a Petri dish to experiment with cryptocurrencies before easing its own ban. Meanwhile, Hong Kong could act as a gateway for Chinese capital to enter the global crypto market. Gemini co-founder Cameron Winklevoss declared on Twitter last weekend:
Easing liquidity conditions in Asia and expectations that deregulation in Hong Kong could boost inflows into Chinese cryptocurrencies could continue to ease prices in the coming days and weeks. Increased Fed tightening stakes.
Looking at BTC/USD on the 4-hour candlestick, the cryptocurrency appears to be forming an upward triangle. These usually signal increased buying pressure and often form before a bullish breakout. If Bitcoin breaks out of his high $25,000 resistance, it will pave the way for a rapid rally towards $28,000 (late May 2022 lows). This would represent another 13% increase from current levels, bringing Bitcoin’s yearly increase to nearly 7.0%.