Bitcoin investors buy dip as price approaches $40,000, up 16% in less than 24 hours
Buyers are returning to the bitcoin market looking for temporary upside opportunities as the price surged to nearly $40,000 on Feb. 25, up 16% in less than 24 hours.
Investors increase bitcoin holds
According to the latest data from CoinMetrics, the number of Bitcoin addresses with balances greater than 0.01 BTC (~$400) hit a record high of 9.51 million. Meanwhile, the number of addresses holding at least 0.1 BTC (~$3,850) has also surpassed 3.34 million for the first time in history.
Source: CoinMetrics, Messari
Overall, the bitcoin network added more than 24,500 addresses with non-zero balances on Thursday, coinciding with a price move that changed from around $37,200 to below $34,500, followed by a recovery towards $40,000.
Data source Ecoinometrics has divided addresses into two groups: one holding less than 1 BTC and the other holding between 1,000 BTC and 10,000 BTC, notice that both groups “buy the dip”.
“Probably a smart move if you have a long-term investment vision.”
Hourly BTC/USD price chart | Source: TradingView
As the Ukraine crisis spread…
The prospect of higher inflation could also increase with the Ukraine-Russia conflict, which will lead to a global escalation in commodity prices, although the US Federal Reserve (Fed) is expected to tighten monetary policy next month.
But Mohamed El-Erian, chief economic adviser to Allianz, explain that central bank officials will not pursue their aggressive rate-hike plans given the deteriorating geopolitical outlook.
“This takes away 50 basis points (rising interest rates). It took 8-9 wins that everyone was talking about that year. I think the US economy cannot adapt to such criticism of monetary tightening. That means the Fed has to be cautious and accept more inflation.”
MicroStrategy CEO Michael Saylor also commented on El-Erian’s comment, adding that the ongoing conflict between Ukraine and Russia could generate inflation and “make Bitcoin attractive.”
According to Bitcoin Treasuries, Saylor’s company holds more than 125,000 BTC worth approximately $4.84 billion in its treasury.
Bitcoin next below $30,000?
Despite Saylor’s bullish outlook outlined after Bitcoin’s intraday rally to $40,000, the market’s fear and greed index remains at 27, indicating investor/trader uncertainty in the period ahead.
Nick, an analyst at Ecoinometrics, too notice Bitcoin price could correct below $30,000 in the long term despite a strong bullish outlook.
The reason given is the imbalance between bearish and bullish positions in the Chicago Mercantile Exchange (CME) bitcoin options market, which is trending down.
“The put-to-call ratio in the CME bitcoin options market remains at 3 put (sell) per call (buy). 50% of the put is at the strike price”, currently below $30,000. So that gives you an idea of what the market is expecting in the near term.”
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