3 Essential Factors Driving Bitcoin Towards a New All-Time High
Bitcoin’s price has started trending upwards again this week, breaking through the pivotal resistance level of $97,000 and hitting its highest point since February.
As of Saturday, Bitcoin (BTC) is trading at around $96,500, reflecting a 30% uptick from its lowest point in April. This article delves into three pivotal reasons why it might reach a new all-time high this year.
Decrease in Bitcoin Supply on Exchanges
A crucial bullish indicator is the significant drop in the supply of Bitcoin on exchanges, which has fallen to 1.42 million—its lowest level in over six years. Currently, 1.42 million coins are held on centralized exchanges, the least since November 2018, compared to a peak of 3.21 million in 2018.
Moreover, the supply of Bitcoin held off exchanges has increased to 18.43 million. This trend suggests that investors are not willing to sell their coins, potentially triggering a supply squeeze as demand rises.
Many of the largest Bitcoin holders are not planning to sell soon. For instance, Michael Saylor’s Strategy—a holder of over 2% of the total supply—continues to acquire more. Additionally, major corporations like Coinbase, Tesla, Galaxy Digital, and Block have shown no intention of liquidating their holdings.
Robust Retail and Institutional Demand
Another key factor contributing to Bitcoin’s potential price increase is the sustained rise in both retail and institutional demand.
An indicator of this demand is the inflow to Bitcoin exchange-traded funds (ETFs). Data from SoSoValue shows that Bitcoin ETFs have only faced four months of outflows since their launch in January of last year.
These funds have collectively amassed more than $40 billion in assets. Blackrock’s IBIT has reached $60 billion, while Fidelity’s FBTC and Ark Invest’s ARKB hold $20 billion and $19 billion in assets, respectively.
The growing investment in ETFs highlights robust institutional demand in the U.S. Furthermore, there are signs that the next wave of demand could stem from countries seeking to diversify away from the U.S. dollar.
These supply and demand dynamics enhance the optimism among analysts regarding Bitcoin’s future. For example, analysts from Standard Chartered forecast that the cryptocurrency could surge to $200,000, whereas Ark Invest predicts it might rise to $2.4 million by 2030.
Additionally, as trade tensions settle, Bitcoin’s demand is anticipated to increase further.
Technical Overview of Bitcoin Price
Finally, Bitcoin’s price shows strong technical indicators that could lead to significant long-term gains. It remains above a rising trendline connecting the recent lows since August 5 of last year.
Bitcoin has also surpassed the critical resistance level of $88,690, which corresponds to the neckline of a double-bottom pattern, and has moved above both the 50-day and 100-day Exponential Moving Averages.
Consequently, there are positive signs of momentum that could propel Bitcoin past the $100,000 threshold and potentially to its all-time high.