It is never easy to make predictions about future movements in the price of Bitcoin, but there is some data that bodes well.
These are not enough data to say that the price of Bitcoin is likely to rise, but if nothing else they reveal a scenario in which an eventual rise would be possible.
While we cannot precisely quantify what the real likelihood is that Bitcoin’s price could continue the climb that began in January, at this time such a scenario appears to be at least plausible.
Current scenario and future scenarios: predictions for Bitcoin’s price
Market value is simply the price at which trades, i.e., purchases and sales, take place.
This price depends primarily on the relationship between supply and demand. When there is balance between these two forces, prices tend to remain relatively stable, that is, to lateralize. But if the relationship becomes unbalanced toward demand, or toward supply, the price tends to move.
In particular for it to move upward it is necessary for the equilibrium to shift in favor of demand, and this can happen either by an increase in demand itself, or by a reduction in supply, or both.
Right now supply seems to be relatively stable. So in the event that there is a significant increase in demand, the price could go up if supply continues to remain stable.
According to the latest Bitfinex Alpha report, number 47, comparing the supply held by long-term holders (LTH) with the supply held by those who were last active a year ago or more, it can be seen that the former is decreasing while the latter is steadily increasing.
This reveals that long-term holders are currently selling, while those who bought during the bull run are buying.
The interpretation of this phenomenon given by Bitfinex analysts is that this is a positive phenomenon for the crypto market as it fuels demand from new entrants. This is coupled with a relatively stable and limited supply, indicating that if there is an increase in buying, the price may actually go up.
Moreover, Bitcoin‘s weekly spot trading volumes spiked last week, amounting to the highest level since mid-2021. So, in the event of an imbalance toward demand, there would also be the volumes at this time to be able to imagine a significant increase in price as a consequence.
While it is not possible to predict whether or not an increase in demand is upon us, these data clearly indicate that such a scenario is far from impossible.
In fact, recent entrants to the crypto market, particularly those who entered during the last bull run, appear to be continuing to buy and hold, making it possible to imagine an eventual increase in demand.
The comments of Bitfinex analysts
Bitfinex analysts commented on the report’s findings, adding that the derivatives market last week saw Bitcoin futures trading volume approach $1 trillion on several exchanges, with open interest in Bitcoin options rising to $12.14 billion.
They stated:
“This suggests that institutional investors are increasingly participating in the market. – indicating that we may be in the early stages of a bull market. Even though this activity might sound enticing to investors, it is generally followed by increasing volatility.”
Hence they are warning investors and speculators that although in theory this period could be the first phase of a bullish market, it could also be characterized by increased volatility.
Therefore, it may not trivially be a period of rising prices, but a period of fast and significant price movements that could eventually end with a de facto rise.
In addition, they point out how the BTC Long-Term Holder (LTH) Spent Output Profit Ratio (SOPR) is returning to a level above one over multiple time intervals, indicating that trades are being made at a profit.
They add:
“The behaviour of long-term Bitcoin holders selling their coins during current market conditions is consistent with previous bear market trends, which is a positive signal for the market.”
These are merely signals, which in theory could also be denied at any moment.
However, the overall environment at this time seems positive, as also indicated by the Fear & Greed Index, which remained in sharply positive territory even after yesterday’s decline due to the bad news regarding Binance.
Therefore, it seems that there would be conditions for a possible increase in the price of Bitcoin, as long as the demand for BTC in the market increases. For now, such an increase has not occurred, and nothing assures that it will.