Bitcoin has made a remarkable comeback in the last few days. On Wednesday, it went above $9,000 for the first time in the year 2020. At times like this, investors usually take profits as a reward for their long indulgence during the bearish moments. It seems this surge is different though, as the taking of profits, evidenced by BTC exchange deposits, has not increased despite the price surge.
This is the opposite of the 2019 rally which saw exchange deposits rise sharply to about 60,000 per day. So far, they have dropped by more than 50% to about 27,000 per day according to data from on-chain market analysis platform, glassnode.
Bitcoin Evolving
Bitcoin is known as a very volatile asset due to the frequent trading of the asset especially at times when the price goes up. This is driven mainly by retail investors, most of whom just want to make some quick gains on their BTC holdings. The lack of willingness to sell at a time when the price is rising really fast may be an indication that there may be more long term investors in the market and fewer retail investors.
This is a positive development as the ‘whales’, mainly exchanges and some early adopters who hold massive amounts of BTC for a long time tend to stabilize its price and reduce volatility. It also ensures that Bitcoin price never goes to certain low prices again as more of it is being held for a long time without selling. This is an implication of Bitcoin reaching maturity which brings it to less volatility and more value.
Are Investors Anticipating Higher Prices?
An increasing number of long term investors may be one explanation for the low exchange deposits. Another possible explanation may be that investors are waiting for a much higher price to take profits.
Analysts have expressed optimism that the price of BTC will be going higher as most resistances standing in its way have been surmounted. If this is the case, then exchange deposits may be rising as the price keeps surging.
The asset is currently selling at just under $9,400 with an intraday loss of 1.30%. Will exchange deposits increase if the price keeps soaring?
