Bitcoin could hit $ 50,000 in the upcoming sessions as more institutions accumulate it against their fears of dollar-linked inflation.
The flagship cryptocurrency, which recently had a market cap above that of Facebook and Tesla, fell from its record high near $ 42,000. Even so, its slump prompted wealthy traders and institutions to buy it on cheaper terms, which led to another liquidity crisis given the limited delivery cap of 21 million tokens.
As a result, Bitcoin price is consolidating sideways for the most part, forming a structure that looks like a symmetrical triangle. In retrospect, this pattern develops as price makes higher lows and lower highs. The trading volume is now falling. Ultimately, the price breaks out in the direction of its previous trend – up or down.
Bitcoin’s trend so far has been bullish. Therefore, if it breaks out of the triangle pattern, the cryptocurrency’s chance of making another upward run is higher. That should bring its price over $ 50,000.
Again, this is due to the textbook description of a symmetrical triangle. An asset breaks out by as much as the maximum height between the top and bottom trend lines of the pattern. In the case of Bitcoin, the amount is around $ 14,000.
Moving across the triangle, coupled with an increase in volume, should bring Bitcoin price above $ 50,000.
Bitcoin liquidity crisis
In principle, the target price seems to be achievable, at least according to a large number of analysts who determine their market distortion using on-chain indicators. For example, data analysts at Glassnode have highlighted Bitcoin’s biggest lack of liquidity to date over the past few weeks, suggesting that it is bullish on the cryptocurrency.
“Not only are funds withdrawn from the exchanges, but the coins are constantly moving into strong hands,” they explained. “In the last 30 days, around 270,000 BTC have moved to companies that are considered HODLers.”
“The [Glassnode] The chart could be more important than the price chart: Bitcoin supply is being withdrawn from exchanges at a rapid pace, ”added Luke Martin, an independent market analyst. “In the past, bull cycles ended after a positive change in fluid supply. That flip hasn’t happened yet. “
One reason for this is a comparatively higher demand for Bitcoin amid an ongoing anti-inflation narrative. Joe Biden’s escalation to US president has raised the prospect of additional government spending to protect the economy from the aftermath of the coronavirus pandemic.
That means a plentiful supply of dollars that many find bearish for the greenback.
Fears of this kind have already led companies like MicroStrategy and Square to swap some of their dollar reserves for Bitcoin. Meanwhile, legendary investors like Paul Tudor Jones and Stan Druckermiller have also invested small sums of money in the cryptocurrency market, with both believing that this is the better version of gold.