Bitcoin bulls are not running out of fuel.
On Friday, traders again increased their bids on the world’s leading cryptocurrency and sent their prices to another record high after Grayscale Investments, a New York-based crypto investment vehicle, added 1,672 BTC to its already booming bitcoin holdings. The company now holds 655.44 BTC, valued at nearly $ 33.5 billion.
The accumulation of grayscale has pulled more Bitcoin out of circulation as demand from retail and institutional investors has increased.
In a statement released on Thursday, analyst Ben Lilly highlighted that Bitcoin investments from Grayscale, Tesla, MicroStrategy, Ruffer Investments, Square, Bitwise and others were sucking more cryptocurrency out of the supply than they were producing. Meanwhile, retailers were pulling bitcoin en masse from the exchanges, further exacerbating the brewing liquidity crisis.
“It means Bitcoin is actually running out,” Lilly explained. “If this continues, there will be a liquidity crisis that will drive prices up significantly.”
Bitcoin at another tip
The BTC / USD exchange rate stood at $ 52,875 at the start of the London session, after rising 2.48 percent that day.
The pair later trimmed a modest portion of its gains to just $ 52,619, but maintained its upside above key technical supports. This, along with declining Bitcoin reserves on all exchanges, increased the potential for the cryptocurrency to have an extended bull run in the upcoming sessions.
Bitcoin is forming another frothy spike amid an institution-led price boom. Source: BTCUSD on TradingView.com Bitcoin is forming another frothy spike amid an institutionally-led price boom. Source: BTCUSD on TradingView.com
The increase led BTC / USD to 85 percent earlier this year. Meanwhile, the move extended the pair’s net recovery from the March 2020 lows of $ 3,858 by more than 1,260 percent and made Bitcoin one of the world’s top performing assets during the coronavirus pandemic.
But…
… Ki-Young Ju has raised some red flags.
The CEO of CryptoQuant, a South Korea-based blockchain analytics company, noted that the recent Bitcoin bull run happened despite a negative Coinbase premium. This means that coinage whales and retail investors drove prices up, which tends to have shorter risk times than institutional investors.
“No healthy bull without USD spot inflows,” said Ju.
Coinbase Premium serves as a benchmark to measure institutional interest in the spot Bitcoin market. Source: CryptoQuantCoinbase Premium serves as a benchmark to measure institutional interest in the spot Bitcoin market. Source: CryptoQuant
Still, analysts with a tendency towards technical patterns believed that Bitcoin would continue its upward trend. A pseudonymous trader noted that the cryptocurrency could hit $ 60,000 in the short term after a bull flag erupted. It’s a bullish continuation pattern.
“It seems BTC has more gas in the can. The bull flag outbreak target of around $ 60,000 is additionally merged by BPRO TP2, which is also given there. “
Bitcoin Bull Setup as highlighted by Trading Tank. Source: BTCUSD on TradingView.com
BTC / USD was trading at $ 52,811 at the time of going to press.
