In the continuation of the strong selling pressure that bitcoin has gone through in the last two weeks, its price continued to decline in the last seven days. In the opinion of some analysts, the maximum of this upward cycle has not been reached, although the recovery could take several months, according to some estimates.
As can be seen in the following graph, since Monday, May 17, when the price touched USD 39,000 , as reported by CriptoNoticias, there were only two days with a boom in the price. Bitcoin fell from $ 46,617 on Monday the 17th to $ 34,880 on Sunday the 23rd, a 25% decline for the week.
Last Wednesday the price even fell to USD 30,000 , the same level that BTC had at the beginning of the year. The bearish sentiment was reinforced this Friday, with a Reuters report on May 21, reviewed by this medium, which reflected possible actions by the Chinese government against cryptocurrency mining.
The analyst Willy Woo affirmed in his latest bulletin on the bitcoin market, published by CriptoNoticias this Friday 21, that the pressure of the sales initiated on May 12 by the criticisms of Elon Musk to bitcoin, reversed the trend of more than a year of outgoing BTC flows from exchanges.
The BTC surge to exchanges, Woo says, is still going on. However, the analyst stressed that the peak of the bitcoin price cycle has not yet been reached, and that the market recovery will take a few months.
Bitcoin has potential to regain bullish momentum
The index of investor fear of a bitcoin collapse reached extreme values on May 16, as reported by CriptoNoticias. However, the macroeconomic environment that framed the bitcoin boom in 2020 and in the first quarter of 2021, may be moving in favor of bitcoin again .
This, according to the latest State of the Network report, by Coin Metrics, commented on by CriptoNoticias last Thursday 20. Not only is there a decline in the US dollar index compared to the main currencies, but also the recovery of the hash rate of Bitcoin to new all-time highs, “shows that the network is resilient, and capable of bouncing back from unexpected drops,” the report says.
As a sign that the network has indicators favorable to a price rally, the investment manager of Moskovski Capital, Lex Moskovski, shows in this tweet the evolution of the accumulation directions, in a Glassnode chart. This signature defines accrual addresses as those that have at least two incoming fund transactions, and that have never spent those funds. Exchanges and miners’ addresses are excluded from these addresses.
As can be seen in the enlarged graph of the tweet, the accumulation addresses have maintained an increasing rate in 2021, with an acceleration in growth in recent days, to exceed 540,000 addresses. This, despite the falling price of BTC.
Metrics favorable to a BTC uptrend
In addition to Woo’s newsletter, this analyst maintains that the NVT metric, which gives the ratio of bitcoin’s market capitalization to the value sent through the network, is at minimum levels. This is considered a leading indicator of a bullish rally.
This judgment, together with that of investor Raoul Pal and analyst William Clemente, highlight fundamental parameters of Bitcoin that have served as support for upward price trends in previous bitcoin cycles. These last two agree that the price of BTC would have already bottomed out.
Bitcoin dominance rises
Between Tuesday 18 and Saturday 22 May, despite the price drop, bitcoin dominance rose from 39.22% to 45.25%, while major altcoins record losses similar to or greater than those of BTC. Bitcoin’s dominance fell below 50% on April 22, for the first time since August 2018, and continued to hit the low of 39.22% last Tuesday.
The cryptocurrencies Ethereum, Dogecoin and Cardano, lost dominance, while Tether (USDT) increased 1%. Much of the dominance of the cryptocurrency market is concentrated in the first 10 , by market capitalization, as reported in this medium.
Bitcoin as an investment portfolio diversifier
Between 1% and 3% of investment in bitcoin can bring diversification and better returns in the medium and long term to traditional asset portfolios. The recommendation, reviewed in CriptoNoticias , is from the well-known investor Anthony Scaramucci, founder of SkyBridge Capital, who has already advised companies to include bitcoin in their accounting , because the continuous expansion of the money supply is a factor that could favor inflation. .
Banks’ interest in bitcoin remains
The wealth and investment management division of Wells Fargo, the fourth largest bank in the United States by total assets, announced that it will implement a strategy with bitcoin and other cryptocurrencies, aimed at its most exclusive clients. Customers with an annual income of more than $ 200,000 or a net worth of more than $ 1 million will qualify, a Wells Fargo spokesperson said.
To make it easier for banks to access cryptocurrency services, the Swiss software company Temenos partnered with the Taurus company. The goal of the association is for financial institutions to be able to bridge the gap between traditional asset management and cryptocurrency operations. Temenos software is used by 41 of the world’s largest banks, including HSBC.