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Bitcoin bull run is likely sustainable, BTC balance on exchanges declines by over 1 million since 2020

  • Bitcoin ETF race continues as Bloomberg ETF analyst speculates Charles Schwab’s entry. 
  • Bitcoin exchange balances have nosedived by over one million BTC since 2020. 
  • BTC price sustained above the $42,000 level as Bitcoin eyes a recovery. 

Bitcoin ETF race likely to intensify as Bloomberg ETF specialist Eric Balchunas speculates $8.5 trillion asset manager Charles Schwab’s entry into the race. BTC exchange balances are on a decline and a recovery in Bitcoin price is likely in the short term. 

Also read: Lido price sustains above $3 despite massive surge in profit-taking by LDO traders

Daily Digest Market Movers: Bitcoin balance on exchanges in a downtrend

  • Bloomberg ETF specialist Eric Balchunas has predicted multi-trillion dollar asset manager, Charles Schwab’s entry in the Bitcoin ETF race with a competitively priced product. 
  • Balchunas believes that the investment giant’s entry could intensify the ETF race. According to sources, the giant is yet to develop its spot Bitcoin ETF. 
  • Crypto analyst Joe Burnett reports that Bitcoin exchange balances have declined by over a million since 2020. This is a significant on-chain development since BTC has a limited supply of 21 million. One million BTC leaving exchange wallets adds to the bullish thesis for the asset. 
  • The Bitcoin halving event where the reward for mining a BTC block will be slashed in half, from 6.25 to 3.125 is nearly 80 days away. 
  • The BTC halving is considered a catalyst for the asset, as Bitcoin price hit a new all-time high post halving in previous instances.
  • Another key on-chain metric that supports the bullish thesis for BTC is addresses with less than 1 BTC. 
  • According to Glassnode data, wallet addresses with less than 1 BTC have been in a downward trend since the asset hit its $49,000 local top. This seems to have bottomed out with more signs of consolidation around the $40,000 level. 
BTC

Bitcoin wallet addresses with less than 1 BTC. Source: Glassnode

  • Bitcoin’s ongoing bull run is likely sustainable as Glassnode data reveals that Bitcoin’s short-term holder realized price continues to climb. This indicates BTC is getting acquired at a higher price, supporting Bitcoin’s uptrend and the thesis for BTC recovery. 
BTC

Bitcoin: Long/Short-term on-chain cost basis. Source: Glassnode

  • Bitcoin’s Spot ETF product is gaining popularity among traders. On January 26, Harvest Hong Kong, one of China’s largest fund companies, filed an application for a BTC Spot ETF, the first application of its kind, submitted to the Hong Kong Securities and Futures Commission. 

Technical Analysis: Bitcoin price likely to recover from slump 

Bitcoin price sustained above the $42,000 level on Monday, recovering from its weekend slump. BTC price climbed above the $40,000 psychological level. BTC price is likely to face resistance at $43,600 and $45,589, two key levels in its uptrend. 

Bitcoin price recovery to the $45,000 level becomes increasingly likely as the asset breaks out of its slump and rebounds from the psychologically important level of $40,000. 

BTC

BTC/USDT 1-day chart 

A daily candlestick close below $40,000 could invalidate the bullish thesis and BTC price could decline to support zone between $38,155 and $38,555.

Open Interest, funding rate FAQs

How does Open Interest affect cryptocurrency prices?

Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.

How does Funding rate affect cryptocurrency prices?

Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.

Author

Ekta Mourya

Ekta Mourya

FXStreet

Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.

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