Bitcoin price started a downside correction below the $ 23.000 support, likely to decline again
The sharp rise of Bitcoin price in recent days has been marked by a strong accumulation of long-term holders. The number of Bitcoin on exchanges has fallen sharply in recent months, despite the recovery. However, due to the influence of the stock market yesterday, Bitcoin has dropped by more than $ 1,000, currently trading around $ 22,955, recording a decline of almost 4% over the past 24 hours.
BTC/USD 4-hour chart | Source: TradingView
These investments are expected to drive Bitcoin price higher as the market’s money supply decreases
Analysts argue that Bitcoin is in the midst of a supply crisis as Bitcoin pushes to an all-time high. Although some of the recent rallies have been largely driven by derivative buyers, it is clear that a large amount of BTC is being accumulated through spot exchanges.
Rafael Schultze Kraft, CTO of Glassnode, shared the chart below on December 21st. It shows the price of BTC and the supply of Bitcoin across exchanges over a macro timeframe. As can be seen, since the local highs were seen during the rally in February to $ 10,500, the amount of Bitcoin on exchanges has plummeted.
Schultze Kraft and others see this as a sign that Bitcoin is in the midst of a supply and liquidity crisis, which will push prices higher over time:
#Bitcoin is in a supply and liquidity crisis.
This is extremely bullish! And highly underrated.
I believe we will see this significantly reflected in Bitcoin’s price in the upcoming months.
Let’s take a look at the data.
A thread ??? pic.twitter.com/vx6rJmiloE
— Rafael Schultze-Kraft (@n3ocortex) December 21, 2020
Some of the evidence that is driving this Bitcoin’s decline across exchanges are institutions. Earlier today, MicroStrategy confirmed that it had finished buying 30,000 Bitcoin:
“TYSONS CORNER, Va.–(BUSINESS WIRE)–Dec. 21, 2020– MicroStrategy® Incorporated (Nasdaq: MSTR) (the “Company”), the largest independent publicly-traded business intelligence company, today announced that it had purchased an additional approximately 29,646 bitcoins for approximately $650.0 million in cash in accordance with its Treasury Reserve Policy, at an average price of approximately $21,925 per bitcoin, inclusive of fees and expenses.”
This adds up to 40,000 Bitcoins they have bought over the past few months. MicroStrategy is just one of many leading corporate and institutional buyers of cryptocurrencies.
You can see the BTC price here.
Read more:
- Bitcoin Price Saw A Correction By More Than $1,000 As The Equity Markets Also Opened In The Red, Is There Any Chance For Recovery?
- MicroStrategy Bought 29,646 Bitcoin Worth $650 Million