Bank of America strategists predict that Bitcoin’s remarkable rise, which took it from around $17,000 at the start of 2023 to more than $30,000 today, may not be over.
Strategists recently assessed bullishness based on transfers between cryptocurrency exchanges and individual wallets, according to Bloomberg.
Bank of America analysis based on bitcoin outflows from exchanges
In the week ending April 4, $368 million worth of bitcoin was transferred to individual wallets, according to NB By Alkesh Shah and Andrew Moss from BofA. They maintain that when investors plan to hold their currencies, they move them from exchange wallets to personal wallets, which can reduce selling pressure.
According to the bank’s strategists, the outflow from the exchanges may have stemmed from concerns about the United States’ regulatory crackdown on digital asset platforms.
The weekly numbers tell a different story. For the week ending April 7, inflows of $57 million were reported in CoinShares’ Digital Asset Funds Flows report. The analysis indicated a week of low volume; However, sentiment was favourable. Interestingly, Bitcoin controlled 98% of all inflows with a value of $56 million.
However, one has to look at the macro factors that could affect the value of crypto assets in 2023. Some economists contend that riskier investments can benefit from predictions of a future Fed rate cut. Bitcoin may be a potential beneficiary when the banking crisis rocked the traditional market recently.
Until April 10, Bitcoin traded above $29,000 before breaching the important $30,000 threshold. It remained close to the critical level through Thursday. The price of BTC is up 24% in one month, despite losing more than a quarter of its value compared to the previous year. However, the bitcoin price is still 56% below its all-time high of $69,000, which was achieved in November 2021.
How macro factors can affect BTC
The latest and biggest event on the market is Ethereum’s Shapella upgrade. It was implemented recently and was the biggest upgrade after the merger. Bank of America strategists anticipate increased volatility due to a significant market event that enabled the withdrawal of cryptocurrency ETH.
However, while they do not expect the event to trigger immediate selling pressure, they do expect greater volatility due to diminished liquidity, derivatives activity, and exchange inflows.
On-chain indices, meanwhile, were bullish at the time of writing. 2% of Bitcoin holders are above the current price, according to IntoTheBlock, while 74% of them are “in the money”. The concentration coefficient is also positive, which indicates that whales and investors are increasing their positions.
More importantly, Bitcoin is almost a year away from the next “halving.” The estimated date for the Bitcoin halving, which happens roughly every four years, is April 2024. Additionally, the lead-up to the event generally booked a positive trend for BTC.
said Vijay Aiyar, Vice President of Corporate Development at Luno CNBC That a cyclical “bottom” develops for Bitcoin before the halving.
Jamie Sly, a CryptoCompare analyst, claimed that while the exact timing and size of returns after the halving can vary, investors seem to be accumulating bitcoin frequently in the run-up to it.
Sly considered the 500-day accumulation period before any Bitcoin halving. According to the analyst, it indicates that we are only 142 days back in the current cycle. This is considering that the market bottomed in November 2022 when BTC reached $15,760.
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