Certain Bitcoin fundamentals suggest the flagship crypto token is well prepared for further growth in this bull market. However, the recent price drop has raised concerns about the reason for this downward trend, despite all indications of continued upward movement.
Bitcoin supply on exchanges reaches four-year low
Facts from on-chain analytics platform CryptoQuant highlighted that the supply of Bitcoin on exchanges has seen a decline of almost 40% in four years and is still declining Bitcoin halving. This underlines the bullish sentiment around the Bitcoin ecosystem as the decline in supply suggests that most investors have no plans to sell their investments anytime soon.
The CryptoQuant data noted that too The question of Bitcoin exceeds supply, which has reportedly been the prevailing trend since 2020. This development provides a bullish narrative as it could continue to increase Bitcoin’s value as “scarcity increases perceived value.” This trend is also expected to continue once the halving occurs since the supply of miners will be halved.
Interestingly, the imbalance between Bitcoin’s supply and demand has led crypto analysts to get excited MacronautBTC to believe that the price of BTC could rise to $237,000. As such, there are still high expectations for Bitcoin despite the crypto token reaching a point new all-time record (ATH) of $73,750.
Why Bitcoin Price Is Crashing
Crypto analyst Alex Kruger has outlined There are several reasons why Bitcoin’s price is crashing despite its strong fundamentals. The first reason he was referring to was the fact that crypto traders in the derivatives market It appears that there is an over-indebtedness, possibly because greed seems to be kicking in and traders are deploying more capital in anticipation of further price increases.
Kruger said ETH could also drag the market down on the hopes of the SEC (Securities and Exchange Commission) approving the Discover Ethereum ETFs decreasing. Bitcoinist recently reported that approval rates for these mutual funds have plummeted in recent months, down to an alarming 35%.
The third reason Kruger mentioned is negative Bitcoin ETF inflows, which have become a trend lately. Interest in these Bitcoin funds has cooled and investors are choosing to take profits. On March 19, BitMEX Research revealed that these ETFs had record net outflows of $326 million.
Also crypto trader and analyst Rekt Capital suggested that Bitcoin is already in the ‘Final Pre-Halving Retrace’. Therefore, significant price corrections can be expected ahead of the Halving, which will take place in April.
At the time of writing, Bitcoin is trading around $63,000, down in the past 24 hours. facts from CoinMarketCap.
BTC rises above $64,000 | Source: BTCUSD on Tradingview.com
Featured image of Finance Commission chart from Tradingview.com
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