The price of the flagship cryptocurrency Bitcoin ($BTC) could be “ready to rally,” according to market observers who have noted that the cryptocurrency’s supply on exchanges has now reached a three-year low.
According to data from Glassnode, first reported on by Bloomberg, Bitcoin’s supply across cryptocurrency exchanges has plummeted to a three-year low, which to Stephane Ouellette, chief executive of FRNT Financial, may mean BTC is ready to break out. He was quoted saying:
If there’s a lot of BTC on exchanges, then people are ready to sell. If it’s off exchange in private wallets, they could be less ready to sell. It’s a way of saying HODLers are more in control.
Bitcoin has notably been trading sideways over the last few months as it’s seemingly stuck within a tight trading range. Despite enduring a sell-off at the tie Russia started invading Ukraine, the cryptocurrency quickly recovered to re-enter its range.
To market analysts, BTC is rangebound not only because of the war in Ukraine but also because of the uncertainty surrounding rising inflation and the hawkish stance several central banks are adopting to curb its growth.
Some pointed to the $47,000 mark as a key level to watch, as it’s a break-even point for many new investors. Until the price of BTC breaks through that mark it’s set to remain within its range, as short-term investors may sell any rally to recoup losses.
Aoifinn Devitt, chief investment officer at Moneta, suggested that BTC is in a discovery process as the cryptocurrency has been around for little over a decade and hasn’t faced a shock environment in that time. To Devitt, we’re “finding out that it tends to be a very high-risk-reward asset that tends to sell off when risk is off the table.”
Despite the range-bound movement, some are still bullish on BTC’s long-term prospects. As CryptoGlobe reported, last week Abra CEO Bill Barhydt said he believes the price of Bitcoin will hit $250,000 in the future, while Pantera Capital CEO Dan Morehead expects it to 10x in the next five years.
Bloomberg commodity strategist Mike McGlone has weighed in on Bitcoin’s performance as inflation surges, interest rates rise, and Ukraine deals with a large-scale invasion from Russia, and suggested BTC will keep “outperforming” gold and the stock market.
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
Featured image via Pixabay