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Even though it is by no means easy to make an accurate prediction about how the price of Bitcoin will evolve in the future, right now there are clear signs of good hope regarding the long-term health of this market.
This is revealed in the latest Bitfinex Alpha report released yesterday, which states that there have been new entrants to this market in recent times, with spot purchases that are typical of the early stages of a bullish market, or the latter stages of a bearish market.
While analysts at Bitfinex urge caution, they suggest waiting for confirmation that the breakout from the 273-day range proves to be sustained.
- Current trend and price prediction for Bitcoin
- Bitcoin’s recent price increase
- Macro conditions
- The BTC price prediction
- Bitfinex’s comments
Current trend and price prediction for Bitcoin
Indeed, in recent days the price of BTC has made a new 2023 high, breaking above $28,000. This allowed it to break out of a bear market that had lasted for 273 days now.
It is worth noting that the $28,000 level had not been touched since 12 June 2022, although for a very brief moment it was also touched on 12 May.
The fact is that on 12 May 2022 there had just been the collapse of the crypto markets due to the implosion of the Terra/Luna ecosystem, while on 12 June there had been the announcement of the bankruptcy of Celsius.
While the implosion of the Terra/Luna ecosystem was a catastrophic event relating directly to the crypto sector, the following failures of Celsius, BlockFi, FTX, and Signature Bank were instead catastrophic events relating to traditional finance as applied to the crypto sector, since these were in all cases theoretically regulated and certainly centralized companies.
So while the crash in May 2022 was to all intents and purposes an internal collapse of the crypto market, the one in June was a crash produced by events external to the crypto sector that nonetheless had direct repercussions on the crypto market because they were directly related to it.
Therefore, it is important that the price of Bitcoin has recovered all the losses accumulated due to the collapses generated by problems external to the decentralized cryptocurrency ecosystem, but at the same time it has not yet been able to recover those generated due to problems internal to this ecosystem.
Bitcoin’s recent price increase
Bitfinex analysts analyzed order flow and on-chain data, coming to the conclusion that Bitcoin’s recent price increase can be attributed to spot buying by both large and small investors and traders.
In contrast, during the accumulation phase in late 2022, with the price below $18,000, it was mainly large investors who were buying BTC.
Now, with the price up 50%, we are seeing new entrants into this market, which bodes well for the long-term health of the Bitcoin market.
In-depth analysis of the on-chain data also shows that there currently appears to be an increase in BTC adoption, as well as an Ethereum deflation rate that has exceeded 5%.
This is therefore a new scenario that, if confirmed in the coming days, would bode well for the current and future health of the crypto markets.
The Bitfinex report also highlights how the US economy is holding up, despite the risk of going into recession, such that it has shown resilience especially during the ongoing banking crisis.
While the erosion of confidence in the banking system remains a problem, even in Europe, central bank intervention seems to have effectively buffered it for now.
The BTC price prediction
In order to understand the possible developments in the current Bitcoin market, the single most interesting factor is the fact that the recent increase in the price is due to both spot purchases by large investors and, above all, purchases by small investors who were very little present in this market in previous months.
The thing is that historical data show that a breakout over a significant resistance level fueled precisely by spot purchases is generally a positive long-term indicator for Bitcoin.
In fact, the funding rate in the derivatives markets has not shown any outliers, so the recent rally has been driven primarily by the spot markets themselves.
While this is not enough to clearly indicate an upward trend, should current price levels consolidate in the coming days, a continuation of the rally would become more concrete.
Bitfinex analysts commented saying that the recent surge in the price of BTC is a promising signal for the cryptocurrency market.
They also point out that in less than a month, the Bitcoin network has recorded nearly one million new wallets with positive balances, touching a new all-time high in March (44.8 million) in this respect.
The seven-day exponential moving average (EMA) of new addresses interacting with the Bitcoin network has also shown an upward trend since August 2022, reaching its highest level since mid-2021.