Strengthening Bitcoin's Market Structure Amidslower Trading Activity

Strengthening Bitcoin's Market Structure Amidslower Trading Activity — Here's What to Know

Despite a significant drop in trading volumes, Bitcoin’s core market structure is showing signs of resilience. Prices have stabilized within a limited range, supported by strong conviction from long-term holders. As an increasing amount of Bitcoin is moved into cold storage, and the supply on exchanges diminishes, the market is shifting from erratic, hype-driven movements to a more stable form of structural support.

Key Takeaways

Bitcoin's market structure is strengthening despite a slowdown in trading volumes.
Price compression may lead to upward movements towards $110,000 and $115,000.
Recently, major institutional purchases signal increasing confidence in Bitcoin.
Market divergence between Bitcoin and Nasdaq highlights potential for future growth.

Bitcoin

The Role of Price Compression in Building Momentum for Future Movements

CIO and founder of MNFund and MNCapital, CryptoMichNL, pointed out that Bitcoin exhibits a strong correlation with the Nasdaq index. Although the Nasdaq has shown steady resilience, Bitcoin's growth has lagged. This discrepancy suggests a mispricing and a market divergence, allowing for the potential climb towards $100,000 while questioning the validity of the often-referenced four-year cycle.

Recently, Bitcoin faced a substantial correction, falling from $115,000 to $80,000 in just a span of two weeks. During this liquidation phase, LVisserLabs observed a significant drop in what they term the rotation between Pure Volatility versus Pure Profitability, or Beta versus Quality. Here, 'Beta' refers to high-volatility stocks, particularly in the tech sector, which are influential to the markets. In contrast, 'Quality' encompasses more risk-averse assets, including stable and profitable companies.

Bitcoin
BTC showing momentum for a potential rally | Source: Chart from CryptoMichNL

At present, Bitcoin has encountered a pause following the sell-off, while Beta assets have made significant recoveries. This suggests that those stocks have rebounded from their losses and are now gradually climbing, indicating a renewed appetite for risk. Given this structural divergence, it's anticipated that Bitcoin may rise to the $110,000 and $115,000 levels in the upcoming weeks or months, potentially reversing its recent decline, as the correction itself seems questionable.

CryptoMichNL recommends focusing on chart patterns and macroeconomic relationships that influence Bitcoin prices directly, instead of adhering strictly to the traditional four-year cycle.

Indicator of Confidence in Bitcoin from Institutional Investors

The ambassador of StandXOfficial and Binance KOL, who also acts as an advisor at KOLsAgency, Investor Ucan, has pointed out that Bitcoin’s recent surge can already be seen in on-chain activity. In the last six hours, there has been a notable increase in institutional demand. On-chain metrics indicate that Binance acquired 7,298 BTC, Coinbase purchased 1,362 BTC, Wintermute bought 2,174 BTC, BlackRock picked up 1,362 BTC, and an unidentified whale acquired 6,192 BTC. In total, 20,438 BTC were purchased in just six hours, amounting to around $1.9 billion.

Ucan emphasized that the timing of these purchases is particularly significant. These inflows occurred just hours before the Federal Reserve was set to release employment data. Institutions seem to be expecting a favorable outcome. A positive report would ease expectations and signal fresh liquidity soon. Retail traders are responding, while institutions appear to be taking action early. If the Fed's confirmation aligns with these inflows, today’s buying may not simply constitute routine momentum, but rather a well-planned strategy.

Bitcoin
BTC trading at $92,087 on the 1D chart | Source: BTCUSDT on Tradingview.com