Another week with the price of bitcoin lateralized to the downside. This stability is strange to us because the price of BTC has us accustomed to great volatility, so this chicha calm worries us.
We started the week with a price of $ 34,400 and ended it with $ 31,600, which represents a drop of 8%. During this week there have been practically no pronounced valleys or large peaks that delight traders and the trading volume has been very low.
This low volume is not good news because it denotes low demand, the price remains within the range but this drop in interest is worrisome.
This week and the next one must be aware of possible sales movements due to the unlocking of shares in GrayScale, this company that holds more than 650,000 BTC does not allow its shareholders to sell the shares for the first 6 months and just this past week and the next the sale is unlocked for many shareholders who bought half a year ago.
Why bitcoin is having a hard time continuing the bullish period
From our point of view there are four issues that are preventing the price from continuing to rise:
- Regulatory problems of the Binance exchange
Personally, exchanges do not seem the best option to accumulate BTC but the truth is is that it is the priority way to buy and sell BTC for many of the bitcoin holders and all the actions that some countries are having with Binance are sowing many doubts and fear in investors that translate into sales of their bitcoin and disinterest.
- Doubts about liquidity in Tether
The basis of centralized stablecoins is that each asset (USDT, USDC …) issued has a backing dollar, in the case of Tether these reserves are widely distributed (see the graph) they maintain very little money in cash and a large part in unknown investments, which has generated many doubts among their clients about their solvency.
These uncertainties negatively influence bitcoin and the rest of altcoins, although its operation is independent of stablecoins, it must be taken into account that many users use Tether to buy and sell BTC and altcoins.
- Low institutional demand
The growth rate of BTC purchases by companies listed on the stock markets has slowed down, many of these companies have bought during the rise and this sharp decline and this long period of lateralization that we have been It has generated doubts and they are waiting to see how the market evolves. It is a matter of time before public institutions return to the market and drive the price up.
- Ban on mining in China
China does not want the digital Yuan to have any kind of competition and is in a process of renovating its image and one of its slogans is to convey an image of a green country, which is why it has banned bitcoin mining in some of the areas with the highest production, this has led to the migration of mining nodes and a sharp decline in the hashrate, causing sales of BTC.
The whales that own between 1,000 and 10,000 BTC sold bitcoin during the bull rally in March and April during the May price drop but as of May 19 they have been buying quietly and increasing their holdings by more of 200,000 BTC these accumulations are not enough to boost the price but they show us that strong hands think with respect to the current situation of bitcoin, that for them the time has come to start buying in a calm way.
What about inflation
Inflation is on the rise in the USA andmany Bitcoin analysts are surprised because the increase in inflation is not leading to an increase in the price of BTC but this fact is not strange, Bitcoin is a booster against inflation in the medium and long term but not in the short term, its high volatility, its low liquidity, compared to gold, its use as a financial asset means that other factors than inflation have more weight in the price
The positive news
Paraguay votes your Bitcoin law.
Investor Carl Icahn, a former Bitcoin skeptic, announces that he will make purchases worth 1.5 billion dollars.
Jack Dorsey, founder of Twitter and Square, will create a company aimed at launching a fully Open Source DeFi platform on top of Bitcoin and will be called TBD.
The future They do
not just paint things well in the short term for the price of bitcoin, the low demand, the low purchase of BTC by public institutions and the negative news do not give the necessary confidence for investors to return to the buys.
In the medium term and long term it is something else, the fundamentals have not changed, the growth in the use of Lightning Network, the possibility of DeFi reaching Bitcoin and an adoption continues to grow, they show us a very promising future.