Bitcoin has made a recovery back towards the $61,000 level during the past day. Here are the factors that could be behind this surge.
Bitcoin Has Made Some Recovery During The Last 24 Hours
After showing lackluster price action under $60,000 during the past few days, Bitcoin has finally shown some momentum in the last 24 hours, with its price surging by more than 4%.
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The chart below shows how the cryptocurrency’s recent trajectory has looked like.
At the peak of this rally, BTC had broken above $61,400, but the asset has since seen a pullback. Nonetheless, even after the drawdown, BTC is still trading around $60,800, which is a notable improvement over yesterday.
As for what could be behind this surge, perhaps on-chain data can provide some hints.
BTC Has Seen Multiple Positive On-Chain Developments Recently
There are a couple of developments that have occurred in the cryptocurrency space recently that could be positive for Bitcoin. First, according to data from the on-chain analytics firm Santiment, BTC investors carrying between 100 and 1,000 BTC have made a considerable buying push during the last six weeks.
At the time Santiment had shared the chart (which was yesterday), the Bitcoin investors with 100 to 1,000 BTC had held a combined 3.97 million tokens. Out of this, 94,700 coins were bought by them within the past six weeks.
The cohort with wallets in this range is popularly known as the “sharks.” Along with the whales, the sharks are considered the key investors in the market, due to the considerable scale of coins that they hold.
Thus, the fact that these large investors were accumulating while BTC had been struggling earlier shows that big money was confident that the cryptocurrency would turn itself around.
The other positive development has been the uptrend that the supply of Tether (USDT) has been showing recently, as analyst Ali Martinez has pointed out in an X post.
Investors generally use stablecoins like Tether whenever they want to escape the volatility associated with assets like Bitcoin. Such investors who store their capital like this, however, eventually plan to venture back into the volatile coins, so the supply of the stablecoins may act as a store of dry powder available for deploying into BTC and others.
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Naturally, when investors do swap their stables for these assets, their prices observe a bullish boost. With Tether’s supply having seen a sharp jump recently, the investors’ potential purchasing power could be considered to have gone up.
This could have happened through two processes: a rotation of capital from Bitcoin and other cryptocurrencies, and fresh capital inflows. The former would imply investors have sold their volatile coins for now, but as mentioned before, these investors may buy back into the market in the future.
The latter would be entirely bullish, as it would mean there is fresh interest entering into the space. In reality, both of these likely occurred to some degree and as Bitcoin has managed to find a rebound, it’s possible new capital inflows have made up for more of the increase.
Featured image from Dall-E, Glassnode.com, Santiment.net, chart from TradingView.com