Buyers returned to the Bitcoin (BTC) market, locating interim upside opportunities as the price rebounded to nearly $40,000 on Feb. 25, gaining 16% in less than 24 hours.
Investors bulk up Bitcoin holdings
The number of Bitcoin addresses with a balance greater than 0.01 BTC (~$400) reached a record high of 9.51 million, the latest data from CoinMetrics shows. Meanwhile, the number of addresses that hold at least 0.1 BTC (~$3,850) also reached 3.34 million for the first time in history.
On the whole, Bitcoin’s network added a little over 24,500 addresses with a non-zero balance on Thursday, coinciding with BTC’s choppy price moves — from around $37,200 to below $34,500, followed by a recovery toward $40,000.
Data resource Ecoinometrics divided the addresses into two groups: one that holds less than 1 BTC, and the other that holds anywhere between 1,000 BTC and 10,000 BTC, noting that both groups have been “buying the Bitcoin dip,” saying.
“Probably a smart move if you have a long term investment horizon.”
As Ukraine crisis unfolds…
The prospects of higher inflation may also be rising with the Ukraine-Russia conflict leading to higher commodity prices globally despite the U.S. Federal Reserve’s preparing to tighten policy next month.
But Mohamed El-Erian, chief economic advisor at Allianz, stated that the central bank officials would not pursue its aggressive rate-hiking plans amid the worsening geopolitical outlook.
“This takes the 50 basis point [rate increase] completely off the table,” he told CNBC, adding:
“It takes the 8-9 hikes people were talking about for this year off the table. I don’t think the U.S. economy could accommodate such slamming of the brakes of monetary policy. It means the Fed is going to have to be even more careful and tolerate inflation.”
GOLDMAN SACHS: THINK GEOPOLITICAL UNCERTAINTY FURTHER LOWERS THE ODDS OF A 50 BPS HIKE IN MARCH— *Walter Bloomberg (@DeItaone) February 24, 2022
Michael Saylor, the CEO of MicroStrategy, commented on El-Erian’s Fed outlook, adding that the ongoing Ukraine-Russia conflict could create inflation and “make Bitcoin compelling.”
Saylor’s firm holds over 125,000 BTC worth circa $4.84 billion in its treasury, as per Bitcoin Treasuries.
Bitcoin below $30K next?
Despite Saylor’s upside outlook, which appeared after Bitcoin’s intraday rebound towards $40,000, the market’s Fear and Greed Index score came out to be 27, showing uneasiness among investors/traders for the near term.
Nick, an analyst at Ecoinometrics, also noted that Bitcoin’s price could undergo a price correction below $30,000 despite having a strong upside outlook in the long term.
The reason cited is the imbalance between bearish and bullish positions on the Chicago Mercantile Exchange’s (CME) Bitcoin options market, skewed more towards the former.
“The puts to calls ratio on the CME Bitcoin options market remains at three puts for every call,” he wrote in a report published Feb. 23, adding that “50% of the puts are on strikes” are now below $30,000.
“So that gives you an idea on what the market expects in the short term.”