Several prominent experts agree on the strength of a potential supply and demand shake-up for Bitcoin this year.
Market News
Bitcoin (BTC) demand has been in a “bear market” for an entire year, but the increase will most likely be the cause of a fresh bull run.
That’s according to prominent economic analyst Lyn Alden, who in a Twitter debate this week bet on demand snowballing and lifting BTC price action.
Back: Monitor supply and demand for BTC price signals
Responding to a PlanB stock-to-flow modeler survey, Alden said that a shift in demand is more likely to cause a BTC price boom than many other events favored by bulls. Bulls.
These include the U.S. approval of a spot-based exchange-traded fund (ETF), a country following El Salvador to legal tender for Bitcoin, advances in the Lightning Community, and the impact of the upgrade. Bitcoin’s recent Taproot grant.
Instead, Alden agrees with Blockstream CEO Adam Again that significant change will come due to a positive feedback loop of supply and demand.
Again describes the process as a “suppression of supply as more and more coins move into cold storage, keep buying, prices go up then chase reflexively.”
“Reflexivity” refers to the mutually beneficial relationship of fundamentals and market expectations when an asset begins to move, which triggers increasingly stronger performance.
This.
– Lyn Alden (@LynAldenContact) January 20, 2022
However, when analyzing the state of supply versus demand, Alden asserts that 2021 has barely changed the status quo since the first quarter.
“BTC has been in a bear market in terms of demand since Q1 2021, back when ARKK peaked,” she argued alongside data from online chain analytics firm Glassnode.
“However, supply has been unusually tight during this cycle, causing prices to rise to surprising levels, even hitting new highs slightly since then. Dry wolf, no spark. ”
‘Monetary policy uncertainty’ impedes trend break
As Cointelegraph reported, Alden is not the only market commentator paying attention to supply factors to add fuel to Bitcoin’s unburnt fire this year.
Related: Bitcoin Will Emerging Stronger After Stocks Drop ‘10% -20%’ – Bloomberg Analyst
Even on a short-term basis, a modest increase in demand could change the trend as exchange reserves dwindle and long-term holders control a portion of the total BTC supply, near all-time highs.
The result, one analyst said this week, could even be a mimicking move similar to the one seen in October 2020 — the springboard for BTC/USD to beat the previous all-time high from 2015. 2017.
In response to Alden, famous analyst and trader William Clemente said that he “completely agrees” with the above view.
“Supply side looks great, holding behavior is strong too,” read part of his own post.
“The qualitative view of Bitcoin’s float is very bullish for the bulls, the problem is lackluster demand, possibly due to the uncertainty surrounding monetary policy.”