After some positive news, bitcoin was able to gain enough bullish sentiment to carry its price back to $11k levels. At the time of writing, bitcoin is comfortably trading at $11k. Investors are still looking out for a possible bull trap if fundamentals don’t remain strong. Let’s go over some of the recent news and why bitcoin needs to break $11.2k if it wants to reignite a rally.
Bitcoin daily chart Source: TradingView
Square, a payment processing giant, has announced their accumulation of around 4,709 bitcoin. This purchase was made to protect the company from negative interest rates, allowing them to secure value in their balance sheets. CEO, Jack Dorsey is a believer in crypto and it shows. Square is now the 2nd publicly traded company that owns bitcoin as part of the company’s assets. They have also released a whitepaper explaining how a company can strategically acquire bitcoin like Square has. This will encourage other large corporations to gain exposure to bitcoin as a way to protect their company’s wealth.
Whales Holding The Line
In an earlier article, I mentioned how whales have created some sort of support level when they accumulated around $10.3-$10.5k. This accumulation has formed clusters of large positions which will be held strongly due to the incentive to do so. If $11.2k gets rejected, we can be sure that $10.3k will be a tough floor to break.
Declining Bitcoin Exchange Netflow
Netflow is the amount of bitcoin that is continually transferred to exchanges. A high netflow indicates a buildup of investors waiting for the right moment to pull the trigger and sell their positions. Data provided by CryptoQuant shows us that the netflow has been low for some time now. This means that investors are looking at bitcoin less of a short-term trade and more of a long-term hold.
Bitcoin exchange netflow. Source: CryptoQuant
Ki Young Ju, CEO of CryptoQuant has said,
“In most cases, exchange netflow is likely to keep negative when the bull-run is about to start. I would say the 2017 bull-run was the same.”
This optimistic view can be confirmed if institutions continue to adopt the asset as an alternative store-of-value and less of a fad.