Exchange reserves plunge to pre-$61K lows: 5 things to watch in Bitcoin this week

Exchange reserves plunge to pre-$61K lows: 5 things to watch in Bitcoin this week

Bitcoin (BTC) sees a cautious start to the week as macro markets dither and Turkey’s currency loses 15% of its value overnight.

After a disappointing weekend that featured a rejection at $60,000, Bitcoin has yet to impress traders, who are expecting sideways action in the coming days.

Our top trading bots

Cointelegraph takes a look at five factors that could influence how Bitcoin price action evolves as a new week gets underway.

All quiet among stocks

The picture across equities is one of hesitancy on Monday as concerns over bond yields remain and coronavirus bites.

It has become a familiar picture for many, Asian markets opened with modest movement. A rise in economic activity will likely fuel bond worries with 10-year Treasury yields already at 1.7% in the United States after gaining rapidly in recent weeks.

Taking a different tone, China revealed that it had more money to spend in financial easing, something which officials claim will reduce risk, rather than add to it.

“This will not only provide positive incentives for economic players, but also help create an environment less likely to spawn financial risks,” Yi Gang, Governor of China’s central bank, the People’s Bank of China (PBoC), said at the weekend.

At the same time, multiple jurisdictions are seeing a return to or continuation of coronavirus lockdown, amid anger at the lack of progress in lifting restrictions on individual freedoms despite vaccine rollouts and the onset of spring.

Separately, turmoil for Turkey saw its national currency, the lira, shed 15% as soon as trading opened. The embattled economy did not benefit from a dip in sentiment after President Recep Tayyip Erdogan fired yet another central bank chief.

“Turkey picks worst time to fire central banker,” market commentator Holger Zschaepitz responded.

“Erdogan removed hawkish Gov Agbal, replacing him w/professor who says high interest rates cause inflation. Widening CA deficit, depleted FX reserves & inflation at 16% make a currency crisis more likely.”

BTC price fails to wow

Two days of disappointment has greeted Bitcoin traders as last weekend’s rally failed to see a repeat performance.

While analysts tipped BTC/USD for a breakout at some point over Saturday and Sunday, no such luck was had, as the pair saw a firm rejection close to $60,000.

The result, which took some by surprise, was a dip below $56,000 before a modest recovery to $57,700 on Bitstamp at the time of writing.

In his latest market comments, Cointelegraph contributor Michaël van de Poppe was unperturbed by the events, as Bitcoin merely continued moving within a familiar corridor.

“Bitcoin is so far, so good and that's great,” he told Twitter followers.

“The $55K region is an interesting point of interest after rejecting the $60K barrier. Expecting a sideways range for a little.”
BTC/USD 1-hour candle chart (Bitstamp). Source: Tradingview

Fellow Netherlands-based analyst and trader Crypto Ed confirmed a further light dip and rebound pattern overnight, with BTC/USD avoiding his scenario of a drop to under $52,000.

In an additional summary, Scott Melker likewise identified ranging behavior, summarizing price action as “still not much happening.”

Order book data from Binance highlighted the extent of the consolidation active on Bitcoin, with support and resistance closing in at $56,000 and $59,000, respectively, on Monday.

Difficulty continues into great unknown

Investors may be thirsty for fresh Bitcoin all-time highs, but two network fundamentals are already at or almost hitting new territory of their own.

At the time of writing, both hash rate and difficulty were firmly bullish — the former within 4% of all-time highs and the latter riding higher than ever.

Bitcoin 7-day average hash rate chart. Source: Blockchain

A classic precursor to price upside, hash rate and mining difficulty underscore the strength and longevity of the current bull run. Hash rate provides an estimate of the computing power dedicated to processing transactions, while difficulty is an expression of the competition among miners for block subsidies.

At the latest automated readjustment on March 19, difficulty increased by 1.95%, marking a return further into uncharted territory after the previous adjustment ended up negative.

As Cointelegraph reported, such adjustments are an essential, if not most important economic feature of the Bitcoin network, allowing it to adapt to changing miner activity and maintain security.

“What critics refer to about Bitcoin being ‘speculative’ is that it provides no organic yield and never will, seeing it as ‘greater fool’ price appreciation,” popular Twitter account Parabolic Trav wrote about the phenomenon earlier this month.

“They fail to grasp the difficulty adjustment and the halving ‘Lesser supply reality’ counteracts ‘greater fool theory.’”

"Young" coins suggest bull run is far from done

Other on-chain indicators nonetheless paint a mixed picture of where exactly Bitcoin is in its bull cycle and how much price upside remains.

In terms of investor sentiment, however, there remains plenty of leeway, as longtime hodlers have still not been moved to sell en masse even at $60,000.

As analytics service Glassnode noted over the weekend, the proportion of coins belonging to older investors has not yet decreased in line with previous bull cycle tops, implying that there is longer to go before 2021 tops out.

Bitcoin circulating supply age chart. Source: Glassnode/ Twitter

At around $53,000, Bitcoin became a $1 trillion market cap asset — but this was still not sufficient incentive to awaken coins long held in storage.

“This is pretty solid price validation; $1T is already strongly supported by investors,” statistician Willy Woo commented on Glassnode data.

“I'd say there's a fair chance we'll never see Bitcoin below $1T again.”

Last week, meanwhile, Cointelegraph reported even more bullish prognoses from stock-to-flow price model creator PlanB, who forecast BTC/USD not stopping at $100,000 and continuing to an average of $288,000 this year.

Exchange reserves back near record lows

It’s not just well-known names favoring continuation. According to data from exchanges, the average hodler is bracing for the long haul and not planning to sell.

Compiled by on-chain resource CryptoQuant, inflows and outflows to major trading platforms are heavily skewed in favor of withdrawals, implying a lack of desire to sell or trade at short notice.

In fact, the weekend saw the largest outflows from exchanges since early March, just before Bitcoin hit current all-time highs of $61,700.

Last week, CryptoQuant CEO Ki Young Ju included the lack of exchange inflows among factors balancing some other, less impressive, indicator readings as part of the overall market picture. Bitcoin, he said, will likely take “some time” to beat its $61,700 record.

“I think BTC would take some time to get another leg up in terms of demand/supply,” he summarized.

Bitcoin exchange netflows (green), reserves (blue) vs. BTC/USD (red). Source: CryptoQuant
Read on here Cointelegraph
Luna token price is soaring, but is the network's growth sustainable?
Terra, an open-source blockchain platform for algorithmic stablecoins, has been on fire over the last half-year or so. The value of its native crypto asset...
Malaysian comms official calls the state to legalize crypto and NFTs
The Malaysian Ministry of Communications and Multimedia (KKMM) is reportedly backing the adoption of cryptocurrencies, with the deputy minister calling...
Polygon raises $450M in Sequoia-led funding round
Layer-2 scaling solution Polygon has raised $450 million in a funding round that was backed by some of blockchain’s biggest venture funds — offering further...
The Sandbox announces $50M fund for its startup accelerator program
Virtual world project The Sandbox announced its metaverse accelerator program that will push the development of the open metaverse by investing $50 million...
Alameda Research leads $35M fund raise for crypto trading app Stacked
Alameda Research, a cryptocurrency trading firm founded by crypto billionaire Sam Bankman-Fried, has led a $35 million investment in the automated crypto...
Digital dollar needs broad consensus among authorities, says US Treasury Secretary
U.S. Treasury Secretary Janet Yellen has given her opinions on the potential of a digital dollar but is hesitant to come to any conclusions at this stage...
Dutch multinational ING considers entering DeFi lending industry
In a presentation made during the Singapore Fintech Festival, Annerie Vreugdenhil, chief innovation officer of ING, announced the firm is working on a trial...
Sfermion raises $100M for NFT and metaverse ventures
Nonfungible token, or NFT, investment firm Sfermion has announced a secondary funding raise of $100 million — appropriately titled Fund II — from a number...
Users panic after Coinbase mistakenly sends 2FA reset notices to customers
Customers of leading U.S. crypto exchange Coinbase have spent the weekend panicking after the exchange mistakenly sent emails to users stating their two-factor...
When will Elon Musk's influence on Bitcoin end?
Elon Musk’s tendency to sway the crypto space with devil-may-care tweets was on display again on Friday, as numerous coins lost between 10–18% in the wake...
Bitcoin Rebounds on Optimism Crypto Bloodbath Nears End
By Yasin – Bitcoin rebounded Monday, as investors swooped in to buy the battered crypto in a sign the selling has likely bottomed as...
Covalent raises $2M to build a decentralized blockchain data provider
A number of notable investors and projects have provided $2 million to Covalent, a project building a decentralized blockchain data provider.Hashed Ventures...
Coinfloor Launches Bitcoin Futures in The UK
Bitcoin-based futures are to be seen in the UK. The London-headquartered announcement, all of them will get an opportunity to get such futures via unique...
Nasdaq Is Looking Into Crypto Futures That Are Distinct From Rivals, CEO Confirms
Not long ago, Morgan Stanley decided to follow the lead of Goldman Sachs in clearing bitcoin-based futures. Meanwhile, more than a month ago two large...
Sweat And Earn. SweatCoin
How to get out of depression, stop being unhealthy, earn money and finally do something significant? For example, like this: get up off the couch and come...