Cryptoquant said in its last article that there is a high possibility of a decline in the price of bitcoin due to stagnant buy signals from institutional investors such as coinbase withdrawals. Bitcoin, which had moved sideways at the $40,000 line after the article went out, fell by about 25% to around $3,800, and as of 10 pm on the 17th, it is moving sideways around $35,000.
The decline was compounded by various causes, including the strong dollar index (DXY) on the New York Stock Exchange. In terms of on-chain data, one reason can be attributed to the fact that the selling price of miners was remarkable.
Just before falling from around $40,000, CryptoQuant CEO Ju-young Ju said through his Twitter that miners are selling at the same level as in 2019, and it is highly likely to form a local top.
In fact, according to the Miner Position Index (MPI), the 30-day moving average index at this time is confirmed to be 2.2 or higher. It is similar to the peak of the bull market in 2019 and the first short-term high in 2017. The miner position index refers to the value obtained by dividing the amount of bitcoin leaked from the miner’s wallet by the moving average for one year.
Miner Position Index looks enough to make a local top. They’re selling $BTC.
I’m going to punt a small short to scalp $BTC in this short-term bearish market.
Chart https://t.co/RbSJ9xbC56 pic.twitter.com/7RbQN7BgwW
— Ki Young Ju Ki Young (@ki_young_ju) January 10, 2021
The price of bitcoin fell to the $30,000 level amid the chaotic market of recurring drastic rises and falls for a week. However, CEO Joo Ju-young explained that it is very unlikely that the price will drop below $30,000.
He predicted on Twitter on the 13th that no matter how much bitcoin falls, it will not fall below $28,000. This is because, when looking at the recent outflow to Coinbase’s custudy wallet, between $30,000 and $32,000 can be regarded as a period of bulk buying by institutional investors.
On the 2nd, the coinbase bitcoin withdrawal amount reached 55,000, the maximum in the past three years. When a large coinbase withdrawal occurs, bitcoins are usually transferred to a custodial wallet for over-the-counter (OTC) transactions. The price of Bitcoin at this time is 32,000 dollars.
There are many institutional investors who bought $BTC at the 30-32k level. The Coinbase outflow on Jan 2nd was a three-year high.
Speculative guess, but if these guys are behind this bull-run, they’ll protect the 30k level. Even if we have a dip, it wouldn’t go down below 28k. pic.twitter.com/3GXLpjyWbp
— Ki Young Ju Ki Young (@ki_young_ju) January 13, 2021
How long will the upward trend of Bitcoin, which started in earnest from the second half of last year, continue?
It is often said that Bitcoin is digital gold, which will replace about 10% of the gold market cap. The current market capitalization of gold is about $10 trillion, and the market capitalization of Bitcoin is $675 billion, which can be considered to have already replaced the market cap by 6.5%, but this is an incorrect calculation method.
There are cases in which bitcoin is inaccessible due to the loss of the private key by the holder, and there are cases in which hundreds of thousands of bitcoins are legally bound due to an accident such as a hacking in the exchange like the Mount Gox incident.
If you calculate the market cap by multiplying the price at the time the bitcoin moves on-chain, the real market cap is currently around $2274 billion. It is 2.2% of the gold market cap. If the inflow of funds from institutions that believe in the narrative that’Bitcoin is Digital Gold’ continues, and the real market capitalization of bitcoin replaces up to 10% of the gold market cap, the bitcoin price will be around $150,000.
In the short term, prices may continue to decline and sideways in the bitcoin market unless there are clear institutional inflows, such as large coinbase withdrawals and large grayscale purchases. However, in the long run, a clear upward trend seems to be dominant. Now is the time to find the low-end buy section from a long-term holding point of view rather than trading.
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