Bitcoin shortage: That’s why BTC is now looking at a price target of $ 50,000
Bitcoin could hit $ 50,000 in the near future as more institutions pile up BTC against their fears of dollar-linked inflation.
The flagship cryptocurrency, whose market cap recently surpassed that of Facebook and Tesla , fell from its record high near $ 42,000. Nonetheless, its downfall spurred wealthy traders and institutions to buy Bitcoin Future cheaply , creating a further squeeze in liquidity from its limited supply cap of 21 million tokens.
As a result, the Bitcoin price mostly consolidates sideways, forming a structure that looks like a symmetrical triangle. In retrospect, the said pattern moves as price makes higher lows and lower highs.
Meanwhile, the trading volume decreases. Ultimately, the price breaks out in the direction of its previous trend – up or down
Bitcoin’s previous trend was bullish. Therefore, the probability that the cryptocurrency will do another uptrend is higher if it breaks out of the triangle pattern. That should bring the price over $ 50,000.
This is – once again – due to the textbook description of a symmetrical triangle. An asset breaks out by as much as the maximum height between the top and bottom trend lines of the pattern. In the case of Bitcoin, the amount is around $ 14,000.
Bitcoin is seeing the breakout of its symmetrical triangle pattern. Source: BTCUSD on TradingView.com
Movement above the triangle, coupled with an increase in volumes, should bring Bitcoin price above $ 50,000.
Bitcoin liquidity crisis
Fundamentally, the price target looks achievable, at least according to a large number of analysts who determine their market prejudices on the basis of on-chain indicators. For example, Glassnode’s data analysts have highlighted Bitcoin’s biggest liquidity squeeze to date in the past few weeks, suggesting that this is bullish for the cryptocurrency.
„Not only are money withdrawn from the exchanges, but the coins are continuously being passed into strong hands,“ the researchers said.
„In the last 30 days, around 270,000 BTC moved to entities that are considered HODLers.“
„The [Glassnode] chart could be more important than the price chart: Bitcoin supply is being withdrawn from exchanges at an all-time high pace,“ added Luke Martin, an independent market analyst.
“Historically, bull cycles have ended AFTER the change in liquid supply turns positive. This change has not happened so far. “
Part of the reason is a comparatively higher demand for Bitcoin amid an ongoing anti-inflation narrative. Joe Biden’s rise to US president has raised the prospect of additional government spending to protect the economy from the aftermath of the coronavirus pandemic.
That means a plentiful supply of dollars – which is perceived by many to be bearish for the greenback.
Such fears have already prompted companies like MicroStrategy and Square to buy Bitcoin and exchange part of their dollar reserves for BTC.
Meanwhile, legendary investors like Paul Tudor Jones and Stan Druckermiller have also invested small sums in the cryptocurrency market, both of whom believe that BTC is “the better gold”.