The Bitcoin market is seeing a new short-term recovery.
A new set of investors looking to profit from the current price pump is said to be driving the current short-term market rebound in Bitcoin, according to Glassnode’s most recent on-chain metrics research. According to the analysts, this might start a new market cycle and cause Bitcoin to veer farther from the protracted downward trend.
Capital Exchange between Investors
There is a large capital rotation taking place among investors, with long-term Bitcoin holders selling their remaining coins to a fresh group of purchasers anxious to buy the digital currency. However, if prices continue to rise, some long-term Bitcoin investors who bought their coins in the last stages of the bear market could be persuaded to use them. They are currently clinging onto their coins, however with very little unrealized profit.
Bitcoin’s recent price increase
Since about mid-January, the price of bitcoin has significantly increased. It has gone from about $17,000 to a new year-to-date high of $24,157 on February 2. Some analysts predict that the price may drop to levels between $20,000 and $21,000 as a result of the recent price channel break and retesting phase.
Demand from New Investors is Strong
Despite the fact that Glassnode researchers believe that the demand from new investors is not especially strong, at least in the medium term, it is anticipated that the price of Bitcoin will still see additional retracements and higher lows followed by higher highs to confirm a considerable upswing. This implies that before surging higher, Bitcoin prices might yet fall below the present $21,616 level.
Future Potential Effects on Cryptocurrency Prices
The FED has declared that even though a disinflationary process has begun, further increases in interest rates will be necessary for it to succeed. Prices are anticipated to decline due to higher interest rates, but they may rise due to the disinflationary process. Furthermore, according to information from CoinShares, institutional investors invested $117 million in digital assets in January, increasing the total assets under control by 43% from January to November.