Bitcoin Market Analysis June 6th — June 12th
As the week came to a close, rumors began to circulate about the potential for unpleasant inflation rates in the United States. They soon materialized, with an 8.6% increase on the country’s Consumer Price Index triggering wholesale market dumps from Friday onwards in both stocks and cryptocurrencies. Bitcoin has started to really suffer from the consequences of this announcement, and market sentiment looks bleak in both the short term and the long term. Here are some of the things we observed across the market last week, as BTC ended the week at $27,500 — over $4k down on its weekly high position.
Recent news out of the United States has demonstrated that inflation data still exceeds market expectations. At its highest point for over 40 years, it is now at a point where it is considered to be gradually getting out of control, and it is certainly unlikely to be contained in the short term. A 50 basis point hike at each of the next two Federal Reserve meetings is a strong probability, and a few 75 basis point hikes at the next FOMC meetings is highly expected. In the short term, inflation remains the main upward pressure on risk assets, and Bitcoin has not been immune to the pressure felt across all markets.
Looking at Bitcoin from a technical perspective, the market continues to be weak and there is little sign of optimism in the short term. The BTC.D index breached 48%, and showed signs of increasing further heading into the new week — even under current market conditions. An uptick in the BTC.D index usually indicates a stronger desire for money to flood into or stay in Bitcoin compared to other cryptocurrencies. Money in the crypto market currently prefers to stay in Bitcoin, and other cryptocurrencies are weaker than Bitcoin.
Last week, centralized exchanges continued the trend of net coin withdrawal, but the strength of coin withdrawal weakened and the overall exchange balance remained stable. During the week, the BTC balance of the exchange decreased from 2.48 million to 2.478,000, with a net withdrawal of more than 2,000 coins in a single week contributing to the stability felt.
The number of Bitcoin that has been held for more than one year continued to hit a new high of 65.7% last week too. Such levels will continue to cause supply and demand mismatches in the market. Once the market enthusiasm for buying long is lit, Bitcoin supply and demand imbalance will, in theory, trigger a sharp rise in prices — however, this feels a long way off at the moment, and if anything we predict that the % of Bitcoins held for longer than one year will continue to steadily climb as hodlers wait for better days.
Although prices are falling, the whales are taking action. In the volume of exchange inflow and outflow, inflow from whales accounted for about 35%, while the volume of whales accounted for above 45%, and this trend began to diverge significantly since May, reflecting whales’ willingness to keep holding Bitcoin.