By Michael Scott
Bitcoin experiences sustained demand that CryptoQuant predicts to help BTC overcome the months-long consolidation.
The Wednesday, August 20 disclosure by CryptoQuant analyst portrays the market perceiving the $57,000 level as a cheaper price tag for Bitcoin than in previous years. The analyst downplays the crypto market volatility where top-tier assets have showcased contrasting fortunes over the past weeks.
Leading the charge from the global market meltdown witnessed at the onset of August is Bitcoin. The lead crypto market value has seen positive momentum to recover from the dip below $50,000.
The CryptoQuant analyst attributes the gain to the sustained demand to regain the well-established price range of $57,000 to $68,000, CoinGecko data shows.
The aftermath saw Bitcoin’s daily transactions surge 17.69% from 650,000 to 765,000 over the past 24 hours.
CryptoQuant’s Axel Adler links the volume hike stemming from the panic selling among holders. The verified author illustrates that despite the panic, the Bitcoin market has successfully withstood the pressure, thus avoiding significant declines.
CryptoQuant Bullish Outlook on BTC
Adler noted in the August 20 Tuesday research post that the surge in transfer volume when Bitcoin regained the $57,000 level indicates sustained demand. The demand points to the bullish outlook harbored by many market participants.
In the recent analysis, Adler considers Bitcoin’s price stability alongside volume surge signals investors consider the prevailing range attractive to acquire relative to the peak level at $73,000 in March. The analyst points to the price level as a reliable floor, leaving Bitcoin on the verge of final market consolidation with low volatility.
Adler issued a pessimistic outlook for Bitcoin, where BTC could descend and breach the $50,000, though briefly.
Adler considers that Bitcoin price movement is an outcome of an interplay of factors. The apparent influence is that both spot market demand blends with the liquidity flow within the futures market.
The analyst forecast that if Bitcoin rests at the $50,000 level, investors would likely buy the dip as they did during Black Monday when the broader market witnessed a widespread meltdown. The downturn seen at the onset of August arose from the interest rate hike by the Bank of Japan to unwind carry trade.
Bitcoin Miners Bleed Coins to Stay Afloat
In a recent statement, the blockchain data firm indicated that miners’ outflows hit 19,000 daily – the highest number ever since March. The rush to sell the BTC arises from the difficulty of minting coins profitably after the April halving event.
The decline in Bitcoin price to test $49,000, as witnessed on August 5, would prompt mining firms to sell more BTC to settle rising costs. CryptoQuant observes that the average operating profit for miners has tightened to 25%, the lowest since January.
Further decline, albeit briefly, would trigger miner capitalization witnessed when prices dipped to $49,000. The underpayment would subsequently force sales from miners from high mining difficulty.
Will Bitcoin Sustain Recovery?
Despite the impressive recovery to the usual range, the analyst observes that Bitcoin’s daily transaction volume is extremely low relative to the 2021 activity.
Notably, Bitcoin only edged closer to 6 million tokens daily volume in mid-2022. Since then, the daily BTC activity has yet to surpass 1 million coins, particularly since the onset of last year. The dismal trade volume is surprising as Bitcoin now changes hands at a higher range than in 2021-22.
Adler attributes the price and volume disparity to the difference in investor quality. The present investors consider Bitcoin’s yield far less than anticipated to warrant affiliation with the asset.
The analyst considers that the present has an influx of flows via TradeFi, with the yield realized by Bitcoin being extremely high. The CryptoQuant analyst states that Bitcoin has witnessed a remarkable transformation since 2019 from a marginal instrument to a professionally valued product for investment.