The near-term outlook for bitcoin has darkened, analysts say, and some now see a possible extension of the steep price drop earlier in the week.
Will the price of Bitcoin fall further?
"There could be another decline as outflows from the cryptocurrency exchange Coinbase Pro have shrunk along with an increase in transactions on the exchanges," said David Lifchitz, chief investment officer for Paris-based company ExoAlpha.
Bitcoin fell more than 20% on Monday to $ 30.305 due to strong selling in the spot market - here quotation in real time. Outflows from Coinbase Pro, considered synonymous with institutional purchases, have drastically reduced from the three-year high of 55.000 BTC observed on January 2.
The Grayscale Bitcoin Trust (GBTC), the largest publicly traded cryptocurrency investment trust, has seen no inflows since Christmas because it has been temporarily closed, analyst Joseph Young noted.
This means that demand-side pressures, which played a key role in pushing bitcoin up from $ 10.000 to $ 41.000 over the past three months, have weakened. The trust reopened on Tuesday.
Meanwhile, currency deposits have picked up the pace, a sign that some investors may be looking to liquidate holdings and take profits. The number of coins held on exchanges increased by more than 57.000 BTC on Tuesday, the biggest one-day change since the markets crashed on March 12, 2020, according to data from blockchain analysis firm Chainalysis. Exchanges have seen an average inflow of 103.000 BTC per day over the past seven days, higher than the 180-day average of 83.700 BTC.
The views of analysts
“At the very least, the increase in inflows suggests that the kind of self-reliant buyers, typically the largest investors, aren't buying as much at the moment,” said Chainalysis economist Philip Gradwell.
Chris Thomas, head of digital assets at Swissquote Bank, expects consolidation in the $ 33.000 to $ 36.000 range over the next few days. The consolidation could end in a bullish move if institutional demand returns.
Although the cryptocurrency may experience deeper drops in the short term, the broader trend remains bullish. "Recent institutional investors have long horizons and will absorb short-term price shocks," while retail investors would buy at discounted price levels for fear of losing money, said Jehan Chu, managing partner of Hong-based Kenetic Capital. Kong. "Expect temporary volatility and then jump back to the $ 40.000 level, followed by a record $ 50.000." Bitcoin is trading around $ 38.900 at press time.
