Forecasting the Expected Price
Bitcoin’s price surged to new record highs above $73,000 on March 12, signaling the start of a price discovery phase for the pioneer cryptocurrency. Despite these historic peaks, institutional demand for Bitcoin continues to rise. On-chain data analysis reveals the key factors behind the recent price upswing.
One factor driving the bullish momentum is the tightening of Bitcoin’s market supply, as investors are moving their BTC holdings to cold storage. In the early hours of March 12, Bitcoin’s market capitalization briefly exceeded $1.5 trillion, with prices reaching a global peak of $72,967. BlackRock and MicroStrategy, two major BTC institutional holders, made bullish announcements that set the stage for the price surge.
BlackRock, in its recent filing with the United States Securities and Exchange Commission (SEC), outlined plans to incorporate spot Bitcoin ETFs into its Global Allocation Fund, MALOX. While this decision is still pending, it generated hopes of increased demand for BlackRock’s IBIT ETF, which already holds over 204,000 BTC.
MicroStrategy CEO and Co-Founder Michael Saylor also made an announcement, revealing the purchase of an additional 12,000 BTC, bringing the company’s total stash to 205,000 BTC.
While these events captured media attention, on-chain data analysis shed light on how traders’ reactions influenced the price increase. The exchange netflow metric from IntoTheBlock tracks the difference between deposits and withdrawals made across crypto exchanges on a given day. A negative exchange netflow, indicating more coins being withdrawn from the market supply, often has a positive impact on prices in the short term.
On March 11, Bitcoin holders moved 4,470 BTC, worth $520 million, from exchange-hosted wallets to cold storage. This suggests that investors are focused on long-term strategies rather than seeking short-term profits, even as Bitcoin prices reach record highs.
Negative exchange netflows reduce the number of coins available for trading, which, when combined with increased market demand, puts upward pressure on the asset’s price. Over $520 million worth of BTC was removed from the market supply within the last 24 hours, with Bitcoin trading around $72,000 on March 12.
It’s worth noting that the last time BTC experienced higher levels of exchange withdrawals was on February 27, coinciding with a 26% surge in price within 48 hours. If this pattern repeats, the outflows recorded on March 11 could pave the way for Bitcoin to break above $75,000 in the near future.
Current market trends suggest that Bitcoin’s price may be poised for another leg-up. IntoTheBlock’s global in/out of the money chart indicates that with Bitcoin now in the price discovery phase, nearly all of the 52 million total Bitcoin holder addresses are in a profitable position. This suggests that most holders may be unwilling to sell, creating a bullish cycle of declining market supply amidst growing institutional demand from MicroStrategy and BlackRock.
With no significant resistance above current prices, Bitcoin bulls are targeting the next milestone price target at the $75,000 level. However, in the event of a bearish pullback, the bulls could regroup and establish strong support at the $68,560 zone. Over 6.6 million existing holders have acquired 2.9 million BTC at this maximum price, indicating potential buying pressure at this level.
Given the positive market sentiment and the recent activities of key stakeholders like BlackRock and MicroStrategy, it is likely that many holders will choose to hold rather than sell. This reduced selling pressure, combined with positive media sentiment, could lead to an instant rebound in the Bitcoin price from $68,000.
