[Bithumb Easyconomy] What’s Next for Bitcoin Sitting at USD 60,000?
Just two weeks ago, Bitcoin hit a record high of USD 60,000, making the industry astir. A lot of investors were optimistic about the price of Bitcoin that might go up to USD 100,000 sooner or later. However, Bitcoin price has been pushed back again at the USD 50,0000 level. According to CoinMarketCap, Bitcoin price, as of March 23, goes up and down at around USD 54,000.
Why Did Bitcoin on Earth Drop?
Those in the industry point out that Bitcoin price will fail to rechallenge USD 60,000 because of the rise in U.S. treasury yields and the concern about increasing inflation therefrom. If the U.S. 10-year treasury yields rise, investors will be more likely to change Bitcoin to the U.S. treasuries which are (or are believed to be) much safer assets.
In particular, it is the mainstream of the industry that while being not much related to the Dow Jones Industrial Average in the U.S. for blue-chip stocks, Bitcoin is powerfully connected with technology stocks-centered indexes. In other words, there is a high possibility that Bitcoin will follow the technology stocks. Technology stocks which require tremendous amounts of money are particularly sensitive to treasury bonds because they are directly hit by an interest rate hike. Then, will even Bitcoin drop together with technology stocks? On March 19 (local time), for example, when the U.S. treasury yields started to rise sharply, Bitcoin as well as technology stocks stalled. In this sense, the reasoning carries conviction.
Another signal that shows Bitcoin price’s ups and downs is the short positioning volume in derivatives exchanges. A short position generally refers to the sales of securities, swaps, futures, and options that investors do not own. Increasing short position leads the sell pressure on Bitcoin to be higher. Conversely, if there is less short position, the sell pressure is lower. Therefore, there is a high possibility to avoid sharp decline in prices.
By the way, it was identified that a considerable short positioning volume is on major derivatives trading platforms including BitMEX or Deribit. “Because every derivatives exchange has accumulated short positions, the selling pressure is very high,” said an anonymous Bitcoin trader. He also warningly said, “Bitcoin is going bearish.”
“USD 1 Trillion Market Value Will Not Collapse.”
Under the situation, the atmosphere in the industry is slightly unsettled or unstable. However, some analysts confirm that Bitcoin’s market value of USD 1 trillion will not easily collapse. A well-known on-chain analyst Willy Woo takes the position that the sell pressure on Bitcoin is big for a short time, but it does not have enough ripple effect to cause a long-term adjustment of the market. “When Bitcoin hit a market cap of USD 1 trillion, only 7.3% of Bitcoin supply moved,” he said. . “This is a very stable flow and shows that investors now view this as a crucial area of support.” He strongly added with confidence, “Bitcoin’s market cap will not go below USD 1 trillion.”
Then, what is the position of miners who have significant influence on the price of Bitcoin? Bitcoin’s powerful rally since the second half of last year was driven by institutional investors in the U.S., but it is still important to take a closer look at the miners’ movement. They have substantial impacts on the price of Bitcoin because they are suppliers. To read the long and mid-term future of Bitcoin, it is necessary to chase the miners’ movement.
After the third halving in May 2020, the outstanding phenomenon in the mining industry was that a lot of small companies were in danger of going bankruptcy. After halving, it has become more difficult to mine but the prices stalled. Small companies with lack of technical capabilities and capital could hardly carry mining costs.
However, the aggressive buying of institutional investors from the second half of last year gave them an opportunity to revive. According to recent data, the average daily revenue of Bitcoin miners was USD 63 million on the 15th day of the month, which is enough to make up for their losses. Even large mining companies are screaming for joy. While Bitcoin’s price has risen by 900% for the past one year, the stock prices of four listed mining companies have soared up by 5000%.
The miners who have recovered their composure do not pour out their volume imprudently any longer. The concerned in the industry consider that miners are seriously concerned about income diversification and strengthening network security. This will also serve as a positive factor for the long-term future of Bitcoin.
What Is the Future Direction of Bitcoin Reaching USD 60,000?
For investors, the most important thing, however, is the immediate price change rather than the long-term future of Bitcoin. Currently, Bitcoin is reaching USD 60,000. Whether the price will go further up or slide down is of the utmost interest.
Of course, there is a lot of good news that can be heard more frequently. The latest issue is the news that Morgan Stanley, a global investment bank (IB), will become the first U.S. bank to offer their clients access to Bitcoin funds. Morgan Stanley said that it plans to launch the products investing into Bitcoin into which only its wealthy clients who hold at least USD 2 million can invest the money within 2.5% of their total net worth. This news led Bitcoin’s price to surpass USD 70 million in a short time.
Expectations for the launch of Bitcoin exchange-traded funds (ETFs) are also rising. The U.S. Securities and Exchange Commission (U.S. SEC) is reviewing an ETF “VanEck Bitcoin Trust” that has been filed by the U.S.-based asset management firm VanEck for an initial decision during the period of 45 days. The decision is expected to be made at the end of the following month. So far, the SEC has repeatedly refused Bitcoin ETF applications for reasons such as concerns about the manipulation of Bitcoin prices. Given that even U.S. investment banks are actively making investments into Bitcoin, a lot of people, however, think that the approval of the Bitcoin FTFs by the U.S. SEC is a matter of time. Ahead of this, the countries such as Canada and Brazil that have approved Bitcoin FTFs earlier are good precedents.
The signals for Bitcoin in the market are too obvious to be considered as bubbles. They mean that Bitcoin has a long and further way to go. Above all, the current situation under which Bitcoin’s value rapidly keeps up with its prices gives confidence to long-term investors. Joseph Young, Cryptocurrency Analyst, said, “There are few long-term investors who intend to sell Bitcoin at the current price.” The end of Bitcoin’s price is unpredictable but one thing is for sure. Investors are never satisfied at the current price of Bitcoin.
*This research and analysis document has been prepared for the purpose of providing information that can be used as a reference based on our reliable data and information, but we cannot guarantee its accuracy or completeness.
*The document has reflected the individual’s opinion, and it may not be consistent with the company’s official point of view.
