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Bitcoin has been hovering around the $59,000 mark for almost a week now in a sideways movement and looks to be preparing for a breakout. Analysts have shared their views on some of the underlying fundamentals with their audiences on Twitter.
On-Chain analyst Ali Martinez used data from Glassnode in order to predict a possibly new price rally. Martinez is using the Entity-Adjusted Dormancy Flow. When the metric surpasses the one million threshold, historically Bitcoin “goes parabolic”.
Despite an almost 1,500% increase in a year, it is still below this threshold. The analyst said on Twitter:
“Despite the 1,465% surge that $BTC experienced since the March 2020 crash, the Bitcoin Entity-Adjusted Dormancy Flow has yet to move past the 1M threshold. When and if it does, #BTC could enter a new parabolic phase posting more gains than what we have already seen.”
Martinez also noted that when the Entity-Adjusted Dormancy is rejected before surpassing the one million threshold, Bitcoin’s price can see a pullback. In 2021, this has happened in January and late February. And according to the analyst we could be close to that zone right now. “Note that everything isn’t all rainbows and unicorns,” he said.
Bitcoin’s supply
Bitcoin miners’ behavior is regarded an indicator and predictor for possible bullish action. In the last few months, miners sold much of their supply which inreased selling pressure in the market.
However, the miners now seem to be holding. Analyst Lex Moskovski has shown his followers on Twitter that miners have changed their position and started buying BTC to increase their reserves. Since late March and early April, miners have bought around 10,000 BTC. According to Moskovksi:
“Miner optimism doesn’t necessarily predict the price but it definitely takes out of the equation a major selling factor.”
Moskovski also said:
“Another 4,380 Bitcoin stacked by miners yesterday. Looks like a trend, indeed.”
After which he replied to Michael Saylor saying:
“The trend is clearly visible right now.”
This is very much in line with what we see on exchanges, where there is a reduction in Bitcoin supply held. Glassnode records a two-year low in the cryptocurrency’s supply held on exchanges which is down to 2,399,090 Bitcoin.
Another analyst, William Clemente, used this data and predicts a supply crunch that will contribute to an appreciation of the Bitcoin price in the third and fourth quarters of this year.
While looking at the short term there seems to be enough fuel to boost Bitcoin price to reach a new all-time high. This according to ChainPulse.ai co-founder and partner at Jarvis Labs, Ben Lilly who told his followers:
“Jet fuel to the upside. Funding rates reset from the drop. Now the liquidity is higher, time to punch it.”
There is lot going on right now to keep a close watch over . April and May have historically been good months for Bitcoin and it just experienced its best March in seven years. Against the backdrop of mainstream adoption for the cryptocurrency increasing, we also see governments in an effort to tighten regulation on cryptocurrency.