Bitcoin climbed on Tuesday, extending its gains from the previous session as traders focused on a set of optimistic fundamentals.
The flagship cryptocurrency reached a week-to-date high of $35,469, up 6.31 percent intraday. Nevertheless, it quickly pared its gains as the European session matured, with its price falling back below the $35,000-level.
Bitcoin can however notch further gains and break above the $40,000-level to eye new record highs. At least the evidence put forth by trade analysts points to the same, featuring short-term indicators that expect bullishness for the cryptocurrency.
Here are the three reasons why Bitcoin could hit $40,000 in the coming sessions.
#1 Massive Bitcoin Outflow
More and more traders are withdrawing their Bitcoin holding from exchanges, according to data put forth by CryptoQuant, a South Korea-based blockchain analytics platform.
Treating the US crypto exchange Coinbase as the benchmark, CryptoQuant CEO Ki-Young Ju called the BTC outflow “the strongest bullish signal.” He tweeted:
“Massive Coinbase outflows. 15k BTC at 32.4k. Looking at the TX, it went to custody wallets that only have in-going transactions. It’s likely to be OTC deals from institutional investors.”
#2 Stablecoin Inflow Rising
Leisl Eichholz, an analyst at blockchain analytics platform Glassnode, spotted a dramatic increase in the stablecoin inflow across all the exchanges.
In her weekly newsletter published Tuesday, the strategist highlighted an on-chain indicator—the so-called Stablecoin Supply Ratio which represents the ratio between the Bitcoin supply and the supply of stablecoins denoted in BTC.
She clarified that if the SSR is low, the current stablecoin supply has more power to buy Bitcoin. Else, the probability of a depreciating Bitcoin is higher.
“BTC’s SSR has been declining in 2021 as more stablecoins are minted,” noted Ms. Eichholz. “When SSR is low, this means that there is a large supply of stablecoins relative to BTC, which indicates more buying power ready to flow into BTC and other assets.”
MicroStrategy announced Tuesday that it has expanded its Bitcoin reserves by adding it with another 295 BTC worth $10 million. The move effectively raised their total BTC stockpile to 71,079 BTC, which is roughly equal to $2.5 billion at the current exchange rate.
The biggest takeaway from MicroStrategy’s latest Bitcoin purchase was its average price. As per its filing to the Securities and Exchange Commission, the company bough $10 million worth of BTC at an average rate of $31,808 per unit.
That somewhat projected the level as the next psychological support for Bitcoin. It increases the cryptocurrency’s opportunity to hit $40,000 and levels beyond it.