Plummeting Paper Bitcoin Could Be Bullish – Here’s Why $BTC Might Go Up
- The paper Bitcoin reserve is dwindling, which is a potentially good sign for Bitcoin. Paper $BTC is typically inversely associated with $BTC's price, so a dump is good for the asset.
- Another bullish signal is the slow but steady absorption of the $BTC influx from Germany's $BTC sale, Mt. Gox's repayments, and the Department of Justice's (DoJ) $BTC seizure.
- Over 30% of all Bitcoins are held by long-term HODLers who haven't touched their coins in over five years. This gives more credence to a potential rally.
Bitcoin dumped below $60K on August 27 and hasn't recovered yet. The coin is down by 6.31% in the last week, with a 9.37% drop in its 24-hour trading volume.
However, according to X user Willy Woo, the decline of paper' $BTC and the absorption of Bitcoins from the Germany sale, DoJ seizure, and Mt. Gox repayments could turn this around.
Despite the sustained selling pressure from $BTC holders who bought between $61.7K and $70.5K, there are reasons to believe a rally is incoming. And it might send $BTC soaring.
Let's see what's in store for Bitcoin and how the dwindling reserve of paper $BTC comes into play.
The Decline of Paper' Bitcoin Could Be a Good SignPaper Bitcoin is the total crypto derivative market where investors speculate on the price of $BTC without owning it. Examples include futures contracts, perpetual contracts, and options. In recent years, derivatives have taken a larger slice of the market (and investor attention).
According to crypto analyst Willy Woo, the paper $BTC reserve on centralized exchanges (CEX) is decreasing. According to his chart, that's a good sign.
The influx of BTC (Germany, MtGox, DoJ) is slowly being absorbed.
Paper BTC bets are declining, a good sign.
Overall, in terms of supply, things have moved from bearish towards neutral. pic.twitter.com/Ej2X9bJq5w
- Willy Woo (@woonomic) September 2, 2024
Whenever paper and spot $BTC went up, Bitcoin's price crashed, with one notable example being last month's dump below $50K. The trend seems clear enough - $BTC recovered after a reduction in paper Bitcoin.
Fortunately, the paper $BTC inventory could have been dumped recently despite the spot reserve continuing to build. This means Bitcoin has fewer obstacles during a potential recovery above $60K and $70K.
$BTC Influx Absorption Could Also Support BitcoinThere's no doubt that the combined $BTC influx of Germany's sale, Mt. Gox's repayments, and the DoJ's seizure created tremendous selling pressure.
But most Mt. Gox creditors seem to have diamond hands, and the market is slowly absorbing the $BTC from Germany and the DoJ. This leads to a bullish conclusion - could $BTC be heading up?
Another promising factor is that over 30% of $BTC's supply is held by HODLers who haven't touched their coins in over five years.
Source: IntoTheBlockThis is a good sign, and coupled with the dump in paper Bitcoin and the $BTC influx absorption, it could be just enough to send the coin rallying.
Bulls have their work cut out because breaking above $70K is a tall task. However, combining these three factors could be the missing piece of the puzzle.
Summary - Are We Staring at a Bitcoin Breakout?To clarify, the current signs indicate bullish potential, but few things are certain about crypto. Bear selling pressure could accumulate and cancel out the breakout pattern.
However, that's unlikely to happen, given the current market conditions. HODLers are keeping the line, paper $BTC reserves are dropping, and it's high time the post-halving effects kicked in.
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