Belgium (CoinChapter.com) — The current Bitcoin price momentum does not necessarily instill too much market confidence. The world’s leading cryptocurrency can retake the $40,000 level soon. Several metrics and indicators hint at such an upcoming development sooner than people may think.
Bitcoin Price Outlook Improves Slightly
After a few rough weeks, it would appear as if there is a potential market recovery for Bitcoin on the horizon. The current trend is pushing Bitcoin’s value closer to $35,000 again, despite hitting the low $29,000 range not that long ago. The recent momentum also appears to have completely invalidated the things Peter Schiff uttered recently regarding [the lack of] institutional demand — for the world’s leading cryptocurrency.
That said, one green daily candle will not necessarily invalidate the recent bearish trend. Yesterday’s candle had little volume when the day was over, which is exciting and can hint at a potential reversal. On its own, the Bitcoin chart above might not mean much. When one begins looking at other developments and metrics, however, a more exciting tale becomes apparent.
Stablecoin Exchange Supply Keeps Spiking
One telltale sign of whether interest in crypto assets surges can be found by looking at the stablecoin reserves across trading platforms. Contrary to what some may expect, things are getting very exciting. The supply of stablecoins in exchange reserves is reaching new highs and now approaches $17 billion. A substantial amount can trigger a market shift for multiple currencies.
It is always intriguing to observe the correlation between the Bitcoin price and stablecoin reserves for exchanges. When Bitcoin’s value goes up, the reserves tend to stabilize or decrease. After and during dips, those reserves spike to new highs rather quickly. It is a potential sign of more buying pressure shaping up and potentially more whales accumulating BTC.
Inflation is Still A Threat, Bitcoin A Savior
People with a functioning brain are capable of connecting the dots in the financial sector. Inflation is coming globally, regardless of what central bank representatives may try to tell people. It is not just traditional bank-fueled inflation to worry about, as there is also consumer-driven inflation to watch out for. Many people spent less due to COVID-19 and now have money to burn.
When consumer-driven inflation takes place, it is often challenging to undo the damage. As prices go up due to higher demand, it may take a while before everything normalizes. Although more spending is good for the economy, one should never take the lingering effects lightly. When inflation occurs, alternative investments – including cryptocurrencies – tend to gain a lot of momentum.
Bonds Performance Is Negligible
In the traditional investment space, bonds are usually a popular option. When Bitcoin performs terribly, bonds tend to perk up as wealth is shifting between the different markets. However, the 30-year bonds in the US, for example, are heading in an uncertain direction. Although the trend over the past decade is rather bearish, it can always reverse course. That seems unlikely even when Bitcoin is in a ditch, though.
One can argue the decline has been ongoing for many years now. The last time bonds traded upward was in 1987, indicating bad well before Bitcoin came around. However, the world’s leading crypto asset proves to be strong competition for failing bonds. A remarkable correlation exists between the two, yet only one tends to note uptrends, which isn’t a bond.
JP Buntinx has been writing about cryptocurrency since 2012. His interest in crypto, blockchain, fintech, and finance allows him to cover a broad range of different topics.
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