Bank of America’s analysts has assessed the bullish trend of Bitcoin through transfers between cryptocurrency exchanges and individual wallets, as per Bloomberg. In their note, Alkesh Shah and Andrew Moss state that when investors intend to hold their coins, they move them from exchange wallets to personal wallets, which could lessen sell pressure.
The outflow from exchanges, according to the strategists, may have been triggered by concerns about the US regulatory crackdown on digital-asset platforms. However, the weekly figures from CoinShares’ Digital Asset Fund Flows Report for the week ending April 7 reported inflows of $57 million, dominated by BTC with $56 million, despite low volumes.
Although Bitcoin’s price increased by 24% in a month to breach the significant $30,000 threshold, it is still 56% below its all-time high of $69,000, achieved in November 2021. Despite this, some economists believe that riskier investments could benefit from forecasts of future Federal Reserve interest rate reduction, and Bitcoin could be a probable beneficiary amid the banking crisis that recently shook the traditional market.
BTC Could be Impacted by Macro Factors
One of the biggest market events recently was Ethereum’s Shapella upgrade, which was executed after the Merge. According to BofA strategists, this significant market event could lead to increased volatility due to the withdrawal of staked ETH. Although they don’t expect it to trigger selling pressure directly, they anticipate greater volatility due to reduced liquidity, derivatives activity, and exchange inflows.
Despite this, on-chain indicators suggest a bullish trend at the moment. IntoTheBlock reports that only 2% of Bitcoin owners are breaking even at the current price, while 74% are “in the money.” The concentration parameter is also positive, indicating that whales and investors are increasing their positions.
Moreover, Bitcoin’s next “halving” is less than a year away, estimated to happen in April 2024. Historically, the period leading up to the event has seen a positive trend for BTC. Vijay Ayyar, VP of Corporate Development at Luno, believes that a cyclical “bottom” is developing for BTC ahead of its halving.
CryptoCompare analyst Jamie Sly noted that investors tend to accumulate Bitcoin in the run-up to halving, even though the timing and magnitude of returns can vary. Sly considered the 500-day accumulation period ahead of any Bitcoin halving and concluded that we are only 142 days into the current cycle, assuming that the market bottomed in November 2022 when BTC hit $15,760.