Bear Market Over? Why Bitcoin Could Soar To $45K As Strong Holders Grow

Reynaldo Marquez

1 year ago

3 mins read

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Bitcoin has retaken the highs of its current range. The first cryptocurrency by market cap trades at $41,300, at the time of writing, with a 6% and 23.8% profit in the daily chart.

Bitcoin BTC BTCUSD — BTC moving sideways after retaking $40,000 in the daily chart. Source: BTCUSD Tradingview

The general sentiment in the market has flipped bullish, the fear and greed index signals greed for the first time in months. Other indicators, as many experts have pointed out, suggest a definite shift in the market. The bulls could see more green days in the coming weeks.

Data from Glassnode, provided by the CIO of Moskovski Capital Lex Moskovski, recorded an increase in the amount of Bitcoin held by “strongest holders”. According to the Illiquid Supply metric, these holders have risen to an all-time high and suggest “bullish” price action.

Charles Edwards, a founder at Capriole Investments, revealed an increase in long-term Bitcoin holders. According to the HOLD Waves metric, these types of investors have been growing their supply since the May 2021 crash. Edwards added:

This type of sharp rise never occurred in the early stages of prior bear markets, suggesting that there is a chance the Bitcoin bull-cycle is still intact.

BTC BTCUSD — Source: Glassnode via Charles Edwards

Additional data provided by Edwards indicates that exchanges platforms had their “first positive outflows” since last week when Bitcoin made a run from its yearly open at around $29,000 to its current levels. This metric suggests that the demand in the crypto market could be returning and could support further appreciation.

Days prior to the current price action, Bitcoin dropped from about $35,000 to its yearly open, as mentioned. Edwards called this price action a “failed breakout”, as sellers were exhausted at those lows and were unable to push the price further down. He added:

The ensuing squeeze to the upside was supported by a heavily short market, with over-exposure to stable-coin contracts. This resulted in a short squeeze over the last week which culminated on the candle highlighted (…)

Bitcoin Fundamentals Turn Positive, Bulls Back In Control?

Edwards reviewed other indicators, such as the Hash Ribbons metric and believes it looks “promising”. The metric saw an important decline after China banned Bitcoin mining from the country. Miners had to migrate to friendlier destinations.

The Bitcoin hash rate and its Energy Value has been rising. Edwards found that both of this metric grew around 8%, indicating that the miners’ migration has ended. Another bullish factor, since these entities can stop selling BTC; the market could see selling pressure diminish. However, investors must remain cautious:

Hash rate is showing a positive and strong trend, not dissimilar to December 2018, suggesting the bottom could be in. However, Hash Rate can give various false positives during capitulation. This is why we remain cautious until the Hash Ribbon buy signal is confirmed.

In the coming days, Bitcoin could see more accumulation around its current levels with a “higher chance” of another leg up to the mid-range, $45,000. If BTC’s price retraces, the invalidation zone stands at $39,000.

The macro-economic outlook presents a potential tailwind and risk for Bitcoin. Edwards claims that the U.S. Federal Reserve and its inflationary monetary policy could continue to boost BTC if the financial institution keeps printing money.

There is a potential risk in the traditional market. If the stock market crashes, Bitcoin could follow. The cryptocurrency has displayed a high level of correlation with the S&P 500. In consequence, it could hurt its chances to reclaim previous highs in case of a dropped. Edwards concluded:

For now, fundamentals and technicals are skewed towards the upside, and our base case is we will move towards the mid- to high-$40Ks over the coming weeks. In the near-term this thesis would be validated if we breakdown below $39K. Finally, Bitcoin cycle history tells us to be wary of significant volatility and downside risk until conditions are further improved.

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

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