After its last halving event, Bitcoin sent a positive signal across the crypto market. Historically, such a large drop in supply has been linked to notable price gains, which inspired hope in investors.
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The halving, which reduced the rate at which new Bitcoins were produced, actually slowed the flow of new Bitcoins into the market. This sudden drop in supply, coupled with increased institutional interest and wider usage, is likely to drive Bitcoin prices higher.
Many investors are closely watching this dynamic and expect a similar trend in the near future; previous drawdowns have sometimes followed significant price recoveries.
Bitcoin: Changing Investor Attitudes
The substantial decline in the number of new deposit addresses on cryptocurrency exchanges marks a clear trend in the Bitcoin market. Data from the well-known analytics tool CryptoQuant shows that there are only 25,000, instead of 70,000 newly recorded Bitcoin deposits. This decline in selling pressure denotes a shift in investor behavior towards holding rather than trading their Bitcoin.
Investors are not willing to sell #Bitcoin
“A reduced willingness to sell assets could lead to a reduction in the supply of Bitcoin in the market, which, with constant or increasing demand, could cause price increases.” – By @AxelAdlerJr
Full post 👇https://t.co/HdipPeIh6h pic.twitter.com/jhNDHiSKst
-CryptoQuant.com (@cryptoquant_com) July 23, 2024
According to CryptoQuant analyst AxelAdlerJr, this decline in selling pressure denotes a shift in investor behavior towards holding rather than trading their Bitcoin.
This behavior shows that the market is maturing. As investors gain more faith in the long-term value of Bitcoin, they are trading less. They are spending more steadily, which could make the market less volatile and more stable. This trend shows that buyers are starting to see Bitcoin as an asset with value, and not just a way to speculate, which is good news for the cryptocurrency.
Institutional trust and market psychology
As more and more investment firms pour money into Bitcoin, everything has changed. Large investment firms and institutional investors provide legitimacy and security to the market, which can affect how ordinary individuals think about investing. Large players can inspire confidence and long-term thinking among small investors.
This dynamic is greatly reinforced by behavioral economics. The activities and confidence levels of additional institutional investors entering the market can affect the sentiment of individual investors. This phenomenon can result in a positive feedback loop, where increased confidence stimulates further investment.
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One important statistic that underscores this shift in investor attitude is the decline in deposit addresses. This implies that, in anticipation of better future prices, investors are less prepared to sell their Bitcoin. Supported by both lower supply and higher demand from institutional and individual investors, this line of thinking fits with the growing belief that the price of Bitcoin will continue to rise.
Featured image from Pixabay, chart from TradingView