This uptrend is cyclical in nature, and these seven signs indicate it's just getting started.
Just three weeks ago, on February 12, the price of Bitcoin crossed the $50,000 threshold. “This near-term rally certainly has some room to run,” said Sean Farrell, head of digital strategy at Fundstrat Global Advisors.
He was right!
The immediate rally on cryptocurrency exchanges rose to just over $70,000 on Friday, March 5, before falling back to where it is currently. So, after surpassing the $50,000 level, the rally definitely had some room to continue.
But here are eight signs that there is still room to move forward after reclaiming its all-time high for the first time in less than two and a half years.
1. The federal funds rate hasn't even gone down
The price of Bitcoin is rising to all-time highs, and the federal funds rate for borrowing US dollars has not yet begun to decline. The last time the price of Bitcoin rose this high, the supply of dollars was at a peak, and the Fed kept interest rates low. This time, I did it without the low prices.
“The rise in prices has coincided with a period of stubbornly high interest rates, suggesting that the jump in demand is due solely to excess cash looking for a place to land,” James Butterville, head of research at digital asset manager CoinShares, recently told ABC News. “. “.
When that changes, likely in 2024, Bitcoin's deflationary haven from the Federal Reserve becomes a huge source of demand for the cryptocurrency while enjoying the same investment boost that tech stocks get from abundant cash and cheap borrowing by low-income companies. Interest rate system.
2. First $20k BTC monthly candle
Bitcoin printed its first-ever $20,000 monthly candle in February, a promising milestone and a sign of the potential surprise of future price volatility.
As a result, he became one of the lead on-chain analysts at Glassnode books“Unreal… February 2024 printed a $19.84K #Bitcoin candle, the largest monthly increase in USD in history. This added $390B to the market cap of #Bitcoin… a significant increase of 47%.”
3. Bitcoin trading fell over the weekend
According to cryptocurrency data analytics firm Kaiko Research in a late February report, weekend cryptocurrency trading continues to decline as a percentage of weekly volume:
“However, this trend has been a long time coming: the share of Bitcoin traded on weekends has declined significantly over the past six years, falling from 24% in 2018 to just 17% in 2023.”
This likely indicates a greater acceptance and use of cryptocurrencies by institutions that operate during business hours, Monday through Friday.
This trend also continues in 2024:
“So far in 2024, only 13% of all BTC transactions between January 1 and February 20 were executed over the weekend. Breaking this down by region, weekend trading declined on both offshore and US-based exchanges.
The drop from 17% to 13% shows the huge impact of Bitcoin exchange-traded funds (ETFs) in the market.
4. Coinbase's Frantic Price Rise (Sorry)
You know a Bitcoin price rally is going to be surprising when the halving hasn't happened yet, and Coinbase trading volume is melting. The San Francisco-based cryptocurrency exchange fell at the end of February as cryptocurrency market prices rose.
The exchange experienced an outage after it could not handle the volume of orders. As a result, the technical glitch also told account holders that they had zero balances in their accounts.
CEO Brian Armstrong posted,
“Applications are now recovering. We have designed and tested a roughly 10x increase in traffic. This exceeds that number. Keeping services redundant is expensive, but we will need to continue working on auto-scaling solutions, and eliminating any remaining bottlenecks.”
The outage occurred shortly after Bitcoin prices crossed $60,000 on the exchange, the highest level the cryptocurrency has achieved since 2021. After news of the Coinbase outage began spreading on social media on Wednesday afternoon, Bitcoin lost about $2,800 of its value.
5. A whale withdrew $1 billion from Coinbase
Sorry, it's not for sale. Not from this whale. Someone withdrew $1 billion worth of bitcoins from Coinbase. Early on March 1, a billion-dollar whale withdrew 16,000 bitcoins from Coinbase, according to Santiment.
This is very bullish for Bitcoin prices. Even with the cryptocurrency approaching an all-time high, this whale is not interested in selling. Moreover, they are not alone.
In February, whales transferred over $1 billion worth of bitcoins from Coinbase. They can sell for a profit now, but they seem to think the price has a higher place to go next.
Overall, Bitcoin on exchanges has fallen to a six-year low, a trend that shows no signs of stopping following the massive $1 billion withdrawal.
This shows high conviction, long time horizons and massive global support for the Bitcoin price going forward.
6. Bitcoin ETFs now own 4% of Bitcoin
According to data from BitMEX, spot Bitcoin ETFs held 776,464 BTC at the March open. This represents a whopping 4% of all Bitcoins in existence, and the Wall Street-regulated ETF market has captured this volume of instant on-chain supply of literal Bitcoin in less than two months.
It's not exactly Arthur Hayes' nightmare scenario where ETFs could “destroy” Bitcoin, but it represents a serious bite out of it in less than two months, enough to predict a violent supply and demand shock that will provide massive support for a significant price rally.
Zach Bandel, head of research at Grayscale Investments, said:
“There is simply not enough Bitcoin to absorb all the new demand, so the natural supply and demand dynamics push prices higher.”
7. Congress floats on allowing banks to hold BTC
Bitcoin ETFs will compete with retail investors. Moreover, banks may soon join the competition for Bitcoin and push scarcity and prices to new levels.
In the House Financial Services Committee, Rep. Mike Flood (R-Neb.) recently introduced a resolution that “ensures consumer protection by removing barriers that prevent highly regulated banks from serving as custodians of digital assets.”
First, ETF issuers and major banks that are now regulated will soon be able to sponsor Bitcoin, contributing to the global scarcity of the 21 million Bitcoins ever issued. The supply and demand shock continues.
