Bitcoin hoarding in personal wallets signals support after jump to $30,000: BofA

Bitcoin hoarding

Strategists at Bank of America Corp. say that if flows between cryptocurrency exchanges and personal digital wallets are any indication, Bitcoin’s great rise in 2023 may not be over yet.

Strategists Alkesh Shah and Andrew Moss wrote in a note that during the week ending April 4, a net $368 million of Bitcoin left crypto exchanges and went to personal wallets. This was the second-largest net Bitcoin outflow from crypto exchanges this year.

“When investors want to hold (or HODL) tokens, they move them from exchange wallets to their own wallets. This could mean that there is less pressure to sell “they told me. “HODL” is an acronym “is a crypto-sector meme that talks about keeping tokens for a long time.

In a note released Monday, BofA strategists wrote that the outflow from exchanges may have been caused by worries about the US government cracking down on digital asset platforms.

Bitcoin’s rise so far this year has been bigger than most other asset classes. This has sparked a tough debate about why the largest token is coming back from a crash in 2022.

Some analysts say that the fact that people think the Federal Reserve will cut interest rates in the future is helping riskier investments like cryptocurrency. Other theories, which are often disputed, say that the coin can avoid stress in the banking sector or can act as a kind of digital gold to protect against inflation.

Big Week
This week was the first time since June 2022 that Bitcoin went over $30,000. Since Dec. 31, the token has gone up more than 80%, which is more than the 19% gain of the Nasdaq 100 tech index. Gold has gone up by about 9%.

Even though US regulators have been very active since FTX and other crypto companies failed, digital tokens have gone up in 2023. As a result of the bankruptcies, the crypto market has become less liquid and the number of trades has gone down.

“I want Bitcoin to get closer to $33,000 before any significant technical correction happens,” “Nathan Batchelor, who is a managing partner at the analytics platform Biyond Trader, said this. “Bitcoin no longer changes when bad news comes out. This is a clear sign that it is a good time to buy.”

Garry Krugljakow, founder of 0VIX, an open-source protocol for lending and borrowing in blockchain-based decentralised finance, or DeFi, says that traders are waiting for another sign to confirm Bitcoin’s breakout.

Print Inflation
He also said that economic data coming out this week, especially the US consumer price index on Wednesday, could be a sign. A survey by Bloomberg News shows that most people think there will be a 5.1% increase in March from the same month last year.

“Anything below 5.2% or around 5.2% could be a sign that the market will keep going up.” “Bitcoin, Krugljakow said. “A rate of 5.3% or higher is likely to give the market a small shock and slow the price action.”

BofA says that, compared to Bitcoin, the net flow of Ether into cryptocurrency exchanges in the week ending April 4 was the largest of 2023. That’s before the biggest software update to the Ethereum blockchain since last year’s Merge.

The so-called “Shanghai upgrade” is the result of work done over many years, and it changes how Ethereum works. Strategists at BofA don’t think that the event will directly cause selling pressure, but they do think that the shift will cause more volatility, in part because of less liquidity, exchange inflows, and derivatives activity.

So far this year, Ether, the second-biggest token after Bitcoin, is up about 55%, which is about the same as a measure of the top 100 digital assets. As of 11:20 a.m. Wednesday in Tokyo, Ether had dropped 1.7% to $1,863, while Bitcoin had lost less than 1% and was still around $30,000.

The text of this story has not been changed since it came from a wire service. The only thing that has changed is the title.

Source: Team CurrencyVeda