Philip Swift, Bitcoin (BTC) Analyst and Founder of Lookintobitcoin.com, explained four reasons why BTC is approaching $ 22,000. Both fundamental and technical factors indicate that the momentum of the cryptocurrency is increasing.
Annual HODL ratio, declining bitcoin foreign exchange reserves, neutral funding rates, and institutional accumulation point to a long-term rise in BTC. Swift wrote:
Is the annual HODL percentage still too high? Yes. Is Bitcoin driven by exchanges? Yes. Is the funding still neutral? Yes. Institutions that are still buying? Yes. Wow, we’ll see you for $ 22,000 in a few weeks when the price reaches 350 dmma x 2 times the golden ratio. ”
Since the beginning of the fourth quarter on October 1, the Bitcoin price on Binance has risen from $ 10,773 to $ 16,730.
HODL ratio shows investor confidence
The bitcoin space belongs to long-time bitcoin holders HODLers. The annual wave of HODL shows an increase in the number of investors who have had BTC for over a year.
After the rally, the one-year HODL wave surged from 59% to over 62%. It is now at an all-time high, which means a clear upward trend.
As the number of HODLers increases, this shows the desire to buy and hold bitcoins for a long time. The current trend may show that investors expect wider acceptance of Bitcoin in the long term.
Funding rates are neutral
During bull cycles, the bitcoin funding rate can skyrocket as long-term cardholders or buyers outweigh the card sellers.
Bitcoin in the futures market uses an interest rate mechanism to balance the market. If there are shorter lengths available, the funding rate will be positive. In this case, buyers must compensate the card sellers and vice versa.
The average funding rate for permanent bitcoin futures is around 0.01%. In recent months, the funding ratio has remained at 0.01%, and sometimes even less.
This indicates that there is a decent balance between buyers and sellers and that the market is not overheating at this time.
Bitcoin stocks are shrinking
As Cointelegraph reported yesterday, about 145,000 bitcoins have left the stock exchange in the past month.
A bitcoin exchange worth $ 2.3 billion per month indicates the intention of investors to hold their long-term assets in bitcoins.
Investors need to list BTC on exchanges in order to sell their assets. Therefore, when churn increases, it usually indicates that investors are planning to purchase BTC for long periods of time.
Institutional accumulation is increasing
In the US, grayscale remains the preferred entry point for institutional Bitcoin investors. The Grayscale Bitcoin Trust is the closest investment asset to a listed fund as it is publicly traded in the United States.
According to Grayscale, the company now has over 500,000 BTC, which is valued at $ 8.35 billion at $ 16,700.
Institutions have continued to accumulate bitcoin as they have experienced a strong recovery since early 2020. BTC’s resilience, especially as it consistently outperforms gold, made the value proposition store more attractive to organizations throughout the year.