Bitcoin: arguments for growth and decline

For four months, Bitcoin has been hovering around $40,000, which is why market participants are increasingly giving diametrically opposite estimates regarding the future trend.

The arguments in favor of Bitcoin growth are: a reduction in supply on cryptocurrency exchanges due to the outflow of coins to cold wallets; the return of whales to purchases; the accumulation of coins by long-term holders (LTH), despite the floating loss.

According to Glassnode estimates, short-term holders (less than a 155-day period) have mostly already spent coins, recording losses. Thus, this group has ceased to exert significant pressure on the price, and it has stabilized.

15% of long-term holders are also at a loss, but continue to store coins in anticipation of future growth.

Moreover, a significant volume of LTH coins added in the period from August to November now demonstrates a loss that is usually observed at the end of a large bearish cycle.

A number of analysts believe that strong hodl sentiment and the absence of speculators (STH) will allow Bitcoin not only to withstand a financial storm, but also to significantly increase in price up to $ 100,000.

Arguments for the decline of Bitcoin: a drop in network activity and a decrease in investor interest. Thus, the number of active addresses decreased to 15.6 million, which is one third less than the maximum in January 2021.

As for investors, most of them are exiting high-risk assets due to a new cycle of monetary policy tightening by the Fed. We have previously disclosed to what extent Bitcoin depends on the interest of institutional investors.

The other day, the head of the St. Louis Fed and a member of the FOMC, James Bullard, announced a possible rise in the key rate immediately by 0.75% at the May meeting (under favorable conditions, the regulator adjusts the value by 0.25%). The US dollar has already reacted with growth to this remark against most currencies.