- Bitcoin’s final advantage received a confidence boost from the East.
- Selling pressure remains at bay, despite Bitcoin plunging into overbought territory.
A few weeks ago, we looked at China’s decision to soften its stance on Bitcoin [BTC] and the overall crypto market. The effects of that decision were now apparent in BTC’s latest performance.
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Recent data suggested so China is increasingly contributing to the level of liquidity flowing into BTC. Several factors contributed to this observation. For example, the latest PMI data showed that China’s manufacturing sector contracted in April. As a result, investors shifted their attention elsewhere, benefiting BTC.
The data also showed that China’s central bank has used open market operations to pump more money into the financial system. This may have encouraged more Chinese investors to acquire more BTC.
In addition, short-term interest rates in China recently fell to a 10-month low, encouraging more borrowing. Some of the cheap borrowed liquidity may have found its way into BTC.
Will the bears continue to quench their thirst for Chinese liquidity?
A scenario where China suddenly raises lending rates would be against BTC. Maybe even force some to sell. Such an outcome would likely have a bearish effect on BTC. Aside from that, investors should note that China is currently one of the major contributors to the recent BTC demand and rally.
BTC’s on-chain characteristics can also teach us something about its current position and prevailing demand. The average coin age of BTC was seen to be on the rise at the time of writing, despite periods YTD.
Source: CryptoQuant
In addition, BTC’s dormancy period has started a downside in recent days, since June 23. It was also significantly lower than at the end of May. This mirrored the selling pressure seen in late May as traders took profits. Interestingly, the price of $30,580 per press of BTC was now at its previous YTD peak in April.
Source: TradingView
Can China’s liquidity help push prices to new YTD highs? This Asian liquidity has certainly contributed to the recent bullish momentum and may well support the recent highs. But traders should note that BTC recently entered overbought territory last week. Expectations for selling pressure are therefore considerably higher.
In addition, BTC’s delivery distribution revealed something interesting about the current state of the market. Whales didn’t add to the selling pressure as much as you might expect, especially after overbought.
Source: Sentiment
How much are 1,10,100 BTC worth today
The above findings indicated that there was still some confidence in BTC’s potential. Especially now that demand from the East is increasing.