- Several macro factors could prevent BTC from quickly rebounding.
- The UTXO signaled a possible preparation for a pre-halving hike.
From Bitcoin [BTC] The recent recovery could have given hope to many investors and enthusiasts, suggesting a possible reversal of the bearish trend that has plagued the cryptocurrency market.
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Hnevertheless, short-term investors may need to approach this recovery with caution. This is because there are factors that could limit Bitcoin’s resurgence, said MAC_D, a CryptoQuant analyst.
The on chain analyst named that the outlook for the currency could be significantly constrained due to macroeconomic factors. First, he pointed to the action of the US government to sell some of their holdings.
Get rid of the reserves
This has had a negative impact on the Bitcoin US to Rest Reserve Ratio. The metric considers the country’s entities, including bank balances and exchange funds, in relation to the rest of the entity offering.
At the time of going to press, the ratio had fallen to 0.90. For instance, the unfavorable economy had forced the country to sell a significant portion of its long-term assets. This is also linked to proposals for tighter regulation for the entire crypto market, which in turn triggered a bearish move.
Source: CryptoQuant
The analyst also referenced history when US government accumulation influenced an incredible rise in BTC value. MAC_D wrote,
“In the past, when U.S. institutional investors’ BTC holdings increased during major bull markets, the price rose significantly.”
Often touted as a safe haven and hedge against economic uncertainty, BTC has built a 64% year-over-year (YTD) increase since the start of the year. traditional market crises.
If traditional markets experience prolonged instability or a severe downturn, investors may resort to liquidating their Bitcoin holdings to cover losses or meet margin calls, resulting in downward pressure on the cryptocurrency.
However, the analyst also mentioned other reasons that could hinder a quick recovery. This includes the decrease in stablecoin offerings and the shortage of smart money traders in the current market.
Source: CryptoQuant
Preparing for the revival
While he maintained that Bitcoin still had good upside potential this year, he also believed it would likely follow the up-and-down performance of 2019 rather than the continuous uptrend of 2015.
In another publication, oinonen_t noted that the lack of liquidity has also played a role in BTC’s recent decline. However, he said it was more of a technical than a fundamental issue.
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In support of his view, the analyst provided insight into the 200-day moving average (MA). He also compared it to the Unspent Transaction Output (UTXO). As of the time of publication, the 200 MA, which acts as support for BTC, had deflected, leading to a decrease in liquidity in the spot market.
In contrast, on-chain data showed that UTXO showed signs of pre-accumulation after a recent decline in Bitcoin era. Therefore, this could tip BTC towards technical correction and on-chain drive for a price increase.
Source: CryptoQuant
