Certain Bitcoin fundamentals suggest that main cryptographic token is well poised for further growth in this bull market. However, the recent drop in prices has raised concerns about the reason for this downward trend, despite everything pointing to a sustained upward movement.
Bitcoin supply on exchanges reached the lowest level in 4 years
Data from on-chain analytics platform CryptoQuant highlighted that the supply of Bitcoin on exchanges saw a drop of almost 40% in 4 years and is reducing before the Bitcoin halved. This underlines the bullish sentiment around the Bitcoin ecosystem as the decrease in supply suggests that most investors have no plans to sell their holdings anytime soon.
CryptoQuant data also noted that Bitcoin demand is outpacing its supply, which is said to have been the prevailing trend since 2020. This development offers an optimistic narrative as it could continue to increase the value of Bitcoin as “scarcity increases perceived value.” This trend is also expected to be sustained when the halving occurs, as miners’ supply will be cut in half.
Interestingly, the imbalance between Bitcoin demand and supply has led crypto analysts like MacronautBTC to believe that the price of BTC could rise to as high as $237,000. As such, there are still high expectations for Bitcoin despite the cryptographic token having reached a new all-time high (ATH) from $73,750.
Why is the price of Bitcoin falling
Crypto Analyst Alex Kruger he has outlined different reasons why Bitcoin price is falling despite its solid fundamentals. The first reason he alluded to was the fact that crypto traders in the derivatives market appear to be overleveraged, possibly because greed appears to be setting in, with traders deploying more capital in anticipation of further price rises.
Kruger mentioned that ETH could also be dragging the market down with hopes of SEC (Securities Commission) approving the Spot Ethereum ETFs waning. Bitcoinist recently reported that the approval odds for these investment funds have plummeted immensely in recent months, falling to an alarming 35%.
The third reason mentioned by Kruger is the negative Bitcoin ETF Inflows, which have become a trend lately. Interest in these Bitcoin funds has cooled, with investors opting for profit-taking. On March 19, BitMEX Research revealed that these ETFs had a record net outflow of $326 million.
Crypto trader and analyst Rekt Capital also suggested that Bitcoin is already in the ‘Final pre-halving retracement’. Therefore, significant price corrections can be expected before the Halving event, which is expected to take place in April.
At the time of writing, Bitcoin was trading around $63,000, down over the last 24 hours, according to data from CoinMarketCap.
BTC rises above $64,000 | Source: BTCUSD on Tradingview.com
Featured image from Financial Commission, chart from Tradingview.com
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