A new wave of global growth in the price of Bitcoin is just around the corner: at least data from a recent study by experts of the analytical platform Glassnode indicate that the crypto market will soon face another crisis in the supply of coins.
In other words, the amount of free BTC in circulation is gradually decreasing, and investors do not plan to part with significant reserves of their crypto savings yet. This means that in the end you will have to pay a lot for the available coins. Let’s talk about what is happening in more detail.
Note that today, Bitcoin was at the level of 45 thousand dollars. Then the market was hit by Chinese news: representatives of the main bank of China said that cryptocurrency exchanges outside the state should not provide services to local investors.
In addition, the bankers once again called the connection with the crypt illegal.
15 minute Bitcoin chart
When will Bitcoin start to rise?
The indicator of the share of those coins that were last moved no later than a year ago forms a local bottom in its dynamics, that is, it stops decreasing. This is usually interpreted as a continuation of the accumulation of bitcoins and the creation of a «supply shock» – a simple shortage of an asset for all willing buyers, which causes a sharp increase in its price.
According to Cointelegraph , similar was observed at the final stage of the previous bull run in 2017. A similar situation was in April this year, when Bitcoin set a new all-time high. However, there are differences between these two periods. Here is a quote from the experts in which they comment on what is happening.
The stock of coins that have not moved for more than one year forms a local bottom at around 54.2 percent of the total. If we compare this figure with 2017, then we can come to the conclusion that even more bitcoins are accumulated in cold storage of investors.
Graph of the dynamics of changes in the number of accumulated «old» coins
And this means more potential for a possible upward movement for the price of the cryptocurrency in the coming months. Given the scale of BTC’s growth in 2017, Bitcoin may well be able to step over the $ 100,000 line by early 2022 – although this is only speculation. In addition, the most positive scenario requires a relatively “cloudless” environment in traditional finance. Yet cryptocurrency, although considered by many to be an alternative independent investment, the entire crypto market as a whole is still moving in the same direction as the most popular stock indices in the world.
Globally, the economy is going through hard times, and Bitcoin’s connection to it may be much greater than many believe. This is the conclusion reached by a cryptanalyst under the pseudonym Material Scientist: he believes that the highs in the price of BTC coincide with the highs in the growth of debt in the Chinese stock market. At the same time, the cryptanalyst rejects the hypothesis that reducing the issue of BTC through halving procedures – that is, reducing the reward for a Bitcoin block by half every 210 thousand blocks – has a positive effect on the price of the cryptocurrency.
In his words , these are two unrelated phenomena. Instead, investors should look at the Chinese debt growth cycles shown in the chart below.
Bitcoin highs coincide with China’s debt cycle
In its statement, Material Scientist cites the words of billionaire and investor Ray Dalio, who is best known for his research on China’s economy. Here is his line.
I think Dalio is right that bubbles are created by debt cycles. And there is definitely a correlation here. What if the halving addiction hypothesis doesn’t matter?
Recall that a major problem has ripened in the Chinese economy now – a debt of $ 305 billion from one of the largest local holdings, Evergrande. Some economists suggest that in order to eliminate the consequences of the collapse of the company, it will have to be restructured with the use of public resources. Either way, the previous growth waves on the BTC chart almost exactly coincide with the peaks in the PRC debt bubbles.
Note that the problems with Evergrande are now being preliminarily resolved for the better. There shouldn’t be any problems with paying off the nearest debt, against which the company’s stock price went up. Here it is on the scale of the last month.
Evergrande chart for the last month
On a five-day scale, things look even funnier. It looks like investors have started to buy back shares that may be on their historic day.
Evergrande chart for the last five days
We believe that the potential of cryptocurrencies could indeed easily be enough to set new price records in the coming months. Nevertheless, digital assets are now recognized not only on the scale of large companies, but also across entire states. So for now, everything speaks in favor of the crypt, and not against it.
