Bitcoin price may recover thanks to increased HODL efforts and rising inflation
On 3 June alone, a total of 23,286 BTC exited centralised trading platforms, its highest levels in over 3 weeks.
- Popular inflation metric Consumer Price Index (CPI) rose as high as 8.3% recently, with analysts expecting this to increase further soon.
- Bitcoin's total valuation currently stands just below AUD$835 billion.
- Since 5 June, the market capitalisation of the digital asset sector has risen by 4.1%.
Over the last 24 hours, Bitcoin has continued to garner positive price momentum, gaining over 5% in value. BTC is now in the green (+2.4%) over the past week, currently trading at AUD$44,390.
While Bitcoin has stayed range-bound between AUD$37.5K and $44.5K (US$27K–$32K) over the past month, derivatives traders are conspicuously bullish on the digital currency's future. Long bets – positions implying Bitcoin will remain in the green after a set period – have continued to increase across exchanges. Bitfinex recorded new highs for the same over the weekend.
The trend has been on overdrive ever since Bitcoin dipped to AUD$33,000 earlier last month. Independent market analyst Kevin Svenson noted: "This is either gonna result in a fantastic pump or a liquidation disaster."
Another indicator that Bitcoin may surge soon is that more and more investors continue to accrue the asset and send it to external cold wallets. On-chain resource provider Glassnode confirmed that on 3 June alone, a total of 23,286 BTC left CeFi exchanges, suggesting increased HODLing from investors.
What lies ahead?
Bitcoin closed out the previous week at around AUD$41.5K (US$30K), a position it has held for more than 3 weeks running. Analysts believe that the asset is likely nearing the end of its consolidation phase and may witness positive price action over the next 7 days. However, volatility may hit various markets as the United States government gets ready to release its latest inflation data.
Jeffrey Rosenberg, senior portfolio manager for asset management firm BlackRock, noted that as the US inflation trajectory continues to be charted out, "it's going to be a very tough time" for investors operating within traditional and emerging markets.
Data released recently shows that the Consumer Price Index, a metric used to gauge inflation, surged to 8.3% in the US for April. These are levels not seen in more than 40 years.
Similarly in Australia, the RBA is expected to make a decision tomorrow about lifting interest rates to combat inflation. With economic conditions worsening globally – thanks in large part to the ongoing Russia-Ukraine war – these numbers may rise further in the near term.
Disclosure: The author owns a range of cryptocurrencies at the time of writing.
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