Recent weeks have witnessed a boom in the stock market, one that is nearing an all-time high while on the crypto market Bitcoin has been stalling at $8000s and $9000s. This relative weakness in price has had some investors worried about the future price of the crypto and are expecting there to be a strong price breakdown.
A top investor in Bitcoin has said that now is a very important time to patient with Bitcoin for various reasons. For instance, analysts have said that a perfect storm has brewed for Bitcoin, hence now is the perfect time for it to succeed.
According to a report published early June by Mike McGlone of Bloomberg, something had to go wrong for Bitcoin not to appreciate in the next few months. The report’s argument noted that there had been institutional adoption of Bitcoin, demand for BTC had increased, and Central Bank was printing large amounts of money. These factors would therefore push the price of Bitcoin to increase and not decrease as some investors are afraid.
An analyst from BlockTower Capital also claimed that “the macro case for Bitcoin has never been more obvious” meaning that the price would eventually increase, investors just had to wait for that time.
Covid 19 pandemic and has highlighted flaws in the traditional financial system, leaving people awed at the steps governments have taken to mitigate damage from these flaws. Central banks across the world are providing more liquidity at this time to the stressed system and people do not understand what effects this liquidity will have.
Due to this, some people have taken Bitcoin as an inflation hedge. The crypto is also benefiting from currency depreciation from different countries. With a fixed supply and a fixed supply curve dictated by the codebase, demand is the only unknown variable to price.
Travis Kling of Ikigai Asset Management took to twitter to remind investors to be patient. In his tweet, he claimed that Bitcoin has transferred wealth from impatient hands to patient hands in the past. This is to mean that BTC can take several months before breaking out to establish a macro trend.
It has also been noted that many investors are Hodling, which might have a bullish effect on the crypto. This is supported by Alistair Milne, who observed that more than 61% of all Bitcoin in circulation has been inactive for over a year. This means that 61% of the coins in circulation have not been moved from their original addresses in more than a year.
History shows that the last time this amount of BTC was inactive was at the start of the bullrun that saw Bitcoin hit $20000 in just around two years.
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