Bitcoin has undergone a monumental surge over the past month. A price gain of 50% lies between its monthly lows of $10,500 to its highs of around $15,800. Bitcoin currently trades just below $15,000 after a retracement yesterday.
Analysts remain confident about the medium-term trajectory of the leading cryptocurrency.
On-chain analyst Willy Woo commented in the wake of the move that this is the "most organic pump" he has seen in "years." He specifically pointed to how data shows that this rally was predicated on "solid organic buying" as opposed to a push by the futures market.
Futures-led rallies are often seen as less sustainable as eventually, those who hold long positions will close said positions, resulting in downward price action. Traders that actually purchase bitcoin are not required to sell their coins.
Woo cited on-chain data from blockchain analytics firm Glassnode, which indicates that over the past few weeks, a "ridiculous amount of coins" were "scooped up and moved off to individual wallets." In fact, the past week contained the "largest one day scoop up" in the past five years.
When coins are sent from exchanges to individual wallets, it is often seen as a sign of long-term accumulation. Users presumably buy bitcoin on an exchange, then send it to their cold wallets for long-term storage.
Woo also pointed to the growing number of Bitcoin "HODLers seen on the blockchain." The number of new Bitcoin "entities" was "shooting through the roof," reaching highs last seen in October 2017, according to the analyst. Not only does this suggest accumulation, but it also suggests the entrance of new investors into the Bitcoin market.
With this in mind, the analyst said that he is expecting "more bullish action" to follow once the ongoing trend of consolidation is completed.
Raoul Pal, CEO of Real Vision and a retired hedge fund manager, has made a name for himself being bullish. As the BTC Times reported previously, he sees no macro resistance levels between $14,000 and $20,000. Simple technical analysis suggests the coin will hit $20,000 once it establishes $14,000 as support.
There are a number of reasons for concern, though.
Analyst "Light" noted that news of the U.S. Department of Justice (DOJ) seizing $1 billion worth of bitcoin from an anonymous hacker is a "material net negative." The coins, which had not been moved in six years, will likely be auctioned off by the DOJ. Light believes that since this is basically a supply-side increase of bitcoin, prices could falter:
"Utterly fascinating to read - the BTC stolen from the Silk Road was iron handed by the hacker from a value of $354,000 to $1,000,000,000+. Now it has entered the supply side. Material net negative, even if institutional buyers are eager and willing."
Such a sale would take place as an over-the-counter transaction and not directly impact the books of exchanges. The idea goes that if buyers can obtain coins at a cheaper price via the auction, they will pull their bids from traditional exchanges, which gives sell-side pressure on exchanges the opportunity to push prices lower.
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