YEREVAN (CoinChapter.com) – Bitcoin (BTC) traded at around $43,700 in the European session on Apr. 7. The digital asset held on to a significant support bar at $43,000 in the wake of an 8% tumble in the previous two days. However, there’s evidence to suggest an uptrend underway. Here are the main drivers behind the possible rally:
As announced on Apr. 6, Terra Foundation, the company behind stablecoin issuance protocol Terra, added $230 million in Bitcoin to its reserve.
In detail, Luna Foundation reserves count approximately $3 billion in Bitcoin, Tether, and LUNA, the governance token that is burnt to mint UST stablecoins.
However, the platform plans to slowly convert most of the mentioned reserves to BTC. Thus, the team will no longer burn all of the LUNA to create UST. Instead, Terra will burn 60% of the LUNA tokens and use the remainder to purchase Bitcoin, adding Bitcoin-backing to the UST coins in circulation.
Also read: Bitcoin-pegged stablecoins? Terra (LUNA) says yes and buys up $125M in BTC.
Moreover, Terra’s chief executive, Do Kwon, intended to gradually buy up $10 billion worth of BTC. Wednesday’s $125 million purchase brings the value of Terra Foundation’s Bitcoin holdings to $1.6 billion. Such large-scale purchases could create scarcity for the flagship crypto by shortening the supply and, subsequently, boosting the price.
In detail, a Bitcoin halving is when the payout for mining a new block is halved, which happens after every 210,000 blocks (approximately four years). The first halving occurred in 2012, and the next is projected to occur in 2024, on block 840,000.
Notably, each of the three previous halvings brought on a bullish wave, albeit not immediately. Furthermore, Peter Brandt, the CEO of trading firm Factor, noted that Bitcoin price boost typically took 33 months “before the next stage.”
Also read: Crypto market drops 6% after Fed announces $1.1T yearly quantitative tightening.
In May 2024, around the time of the fourth halving, another 10X leg up is possible, said the veteran investor. However, Brandt added that he did not believe BTC would manage such a massive uptrend.
Analytical platform Ecoinometrics looked at the data out of the Chicago Metcantile Exchange (CME) Bitcoin derivatives. They noticed a divergence between what retail and the “more sophisticated investors” are doing.
The asset managers class (which consists mainly of Bitcoin futures ETFs) is on the bullish side. Their net long positions have never been so high. That means the retail investors (or I guess the less sophisticated investors) have been buying this breakout.
said Ecoinometrics.
Also read: MicroStrategy buys Bitcoin worth $190 million to push total BTC holdings above $4B — MSTR consolidates.
Despite the reasons listed above, any solid predictions are hard to make, considering the unstable geopolitical situation. Additionally, Federal Reserve’s hawkish policy against inflation could dampen BTC’s upside attempts.
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