Bitcoin Demand “Bear Market” Breakout Will Trigger Next BTC Price Surge – Analysts

[ad_1]

Demand for Bitcoin (BTC) has been in a “bear market” for an entire year, but a surge is most likely what will trigger another price surge.

That’s according to prominent economic analyst Lyn Alden, who in a Twitter discussion this week bet on the snowball effect of demand and rising BTC prices.

Back: Monitor supply and demand for BTC price indices

Responding to a survey from the creator of the stock-flow model PlanB, Alden said that a transformation in demand is more likely to cause a surge in BTC prices than several other bull-favored events.

These include the United States’ endorsement of a spot-based exchange-traded fund, a country following El Salvador to make Bitcoin legal tender, advances in the Lightning Network, and the ripple effect of Bitcoin’s recent Taproot upgrade.

Bitcoin Twitter poll (screenshot). Source: PlanB/Twitter

Instead, Alden agreed with Blockstream CEO Adam Back that big changes would result from a positive supply and demand feedback loop.

Back described the process as a “supply squeeze as more and more parts are moved to cold storage, continuous buying, price escalation and then reflexivity.”

“Reflexivity” refers to the mutually beneficial relationship between fundamentals and market expectations once an asset begins to move, triggering stronger and stronger performance.

This.

— Lyn Alden (@LynAldenContact) January 20, 2022

Analyzing the current state of supply versus demand, however, Alden confirmed that 2021 has done little to change the status quo since the first quarter.

“BTC has been in a bear market in terms of demand since the first quarter of 2021, when ARKK peaked,” she explained alongside data from on-chain analytics firm Glassnode.

“However, supply has been unusually tight for this cycle, keeping prices to a surprising degree, even hitting slight new highs at some point since then. Kindling dry, no spark.” Annotated chart of the active offer of bitcoin. Source: Lyn Alden/Twitter ‘Uncertain monetary policy’ hinders trend break

As Cointelegraph reported, Alden is not the only market commentator watching supply factors to fuel Bitcoin’s extinguished fire this year.

Related: Bitcoin Will Come Out Stronger After Stocks Fall ‘10% to 20%’ – Bloomberg Analyst

Even in the short term, a slight increase in demand could turn the tide as FX reserves dwindle and long-term holders control some of the overall BTC supply, which is near all-time highs.

The result, an analyst said this week, could even be a copycat move similar to October 2020 – the springboard for BTC/USD breaking its previous all-time highs from 2017.

Responding to Alden, popular trader and analyst William Clemente said he “completely agrees” with the outlook.

“Supply side looks great, holding behavior is strong,” reads his own article.

“The qualitative view of Bitcoin’s float is very supportive of bulls, the problem is lackluster demand, likely due to monetary policy uncertainty.”

[ad_2]