Bitcoin's Potential Upswing: Increasing Inflows, Miner Reserves, and Rising Network Fees
Summary:
Bitcoin's value saw a slight dip of 0.3% over the past week, but fresh evidence hints at factors contributing to a potential upswing. Bitcoin saw an inflow of $702 million, reserves of Bitcoin miners are increasing, and the week experienced a 35% increment in Bitcoin fees, indicating heightened network demand. Although the immediate trend of Bitcoin's price is uncertain, these factors collectively signal a potentially optimistic short-term result.
Despite a marginal 0.3% dip in Bitcoin (BTC) value over the last week, fresh evidence hints at a few encouraging elements for a potential upswing. Bitcoin has remained steady between the $41,800 and $43,900 range. While there seems to be ambiguity about the immediate trend of BTC's price, there are three factors signalling a potentially optimistic short-term result.
Bitcoin saw an inflow of $702 million, as reported by CoinShares which states that BTC investment products constituted 99% of all inflows. This inflow to Bitcoin summed up to $703 million, elevating the overall global assets managed to $53 billion. Details from CoinShares also reveal a slowing down of outflows from Grayscale’s GBTC ETF. Meanwhile, investment avenues that profit from falling rates, aka short-Bitcoin investments, experienced slight outflows resonating with a shift in negative sentiment. It's crucial to remember that at the end of January BTC investment products saw an outflow exceeding $500 million. Combined with aggressive GBTC selling, these could have contributed to the recent market correction.
Reserves of Bitcoin miners are on an upward trend according to CryptoQuant. There was a buying frenzy among Bitcoin miners as January concluded with the Miner Netflow Total on February 1st standing at -13,542 BTC. This metric highlights the disparity between coins flowing into and veering away from the exchange. When the figure is negative, it indicates a drop in miner reserves. At the moment, in a span of the last 24 hours, more than 2,400 BTC have been added to the miners’ reserve. A surge in reserve signifies a decline in selling pressure from this sector of market participants. However, the Miner’s Position Index, or MPI, is still above 1, signalling miner sales are moderate on a one-year average. If the miner reserve continues to ascend in the coming weeks, the MPI index will likely take a hit. MPI index below 1, suggests miners are inclined to hold.
The week saw a 35% increment in Bitcoin fees, as per blockchain analytics provider, Token Terminal. A consolidating market witnessing a rise in on-chain revenue is generally indicative of network demand. An elevated utilization of the Bitcoin network potentially triggers the expansion of user base, ultimately nudging the price along a positive trajectory. If network fees rise, it implies user readiness to pay premium for their transactions to be included in the subsequent block. This ongoing market trend might cultivate a positive momentum for BTC in the charts.
Bitcoin price regained its hold over the 50-EMA. Trading view's daily chart discloses an immediate resistance at around $44,500 for Bitcoin. Even though BTC fell to the $38,500 support on January 23, it swiftly returned above its 50-exponential moving average. The prime overhead resistance exists at Bitcoin’s swing high at $49,100, however if the existing bullish trend perseveres, BTC may query $44,500 again.
Published At
2/6/2024 10:55:00 PM
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