Breaking ‘bear market’ in Bitcoin demand will spark next BTC price surge — Analysts

Demand for Bitcoin (BTC) has been in the “bear market” for a year, but the surge is most likely to cause new price increases.

It bet that demand would snowball and boost BTC’s pricing behavior in this week’s Twitter debate, according to prominent economic analyst Lin Alden.

Back: Monitor supply and demand for BTC price clues

In response to a study by Equity-to-flow modeler Plan B, Alden said changes in demand are more likely to trigger a BTC price boom than other bull-favorite events.

This includes the US approving spot price-based exchange-traded funds, countries that make Bitcoin legal tender following El Salvador, advances in Lightning Network, and the knock-on effect of Bitcoin’s recent Taproot upgrade. ..

Bitcoin Twitter survey (screenshot). Source: PlanB / Twitter

Instead, Alden agreed with Blockstream CEO Adam Back, saying that the positive feedback loop of supply and demand would result in significant changes.

“As more coins move to refrigerated warehouses, continue to buy, rise in prices, and are chased by reflexivity, supply is squeezed,” Buck described the process.

“Reflexivity” refers to a beneficial relationship between fundamentals and market expectations after an beginning to move, which causes the mutually strong performance.

However, when analyzing the current state of supply to demand, Alden confirmed that 2021 did little to change the status quo since the first quarter.

“BTC has been in a bear market in terms of demand since the first quarter of 2021 when ARKK peaked,” she claimed, along with data from on-chain analytics firm Glassnode.

“But the supply side was unusually tight in this cycle, maintaining surprisingly prices, and since then even touched a slight new high at some point. Dry crater, no sparks.”

Bitcoin Active Supply Annotated Chart. Source: Lyn Alden / Twitter

“Uncertain monetary policy” hinders trend breaks

As Cointelegraph reported, Alden isn’t the only market commentator looking at the supply factors to add fuel to this year’s Bitcoin extinguishing fire.

Related: Bitcoin emerges stronger after stocks fall “10%-20%” — Bloomberg Analyst

Even in the short term, a slight increase in demand can change the trend as foreign exchange reserves decrease and long-term holders control the proportion of total BTC supply. This is close to the highest ever.

One analyst said this week that the result could even be a mimicry move similar to October 2020. The BTC/USD stepping stone has surpassed the record high since 2017.

In response to Alden, popular trader and analyst William Clemente said he “completely agreed” with that view.

“The supply side looks great and the retention behavior is strong,” read some of his own posts.

“The qualitative view of Bitcoin floats is very positive, and the problem is a sluggish demand, probably due to uncertainties about monetary policy.”

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