Supply crunch proving Bitcoin price resistance at $60,000 level

Bitcoin mainstream adoption from Wall Street giants including the largest brokerage firm BTIG and the biggest bank such as J.P. Morgan Chase has roughly doubled the price of the cryptocurrency in 2021 but the asset is witnessing a price resistance of around $60,000. Bitcoin continues to draw investors as a potential hedge against inflation as the central banks across the world provide trillions of dollars of stimulus to combat coronavirus and boost the economy. 

Bitcoin is currently trading at $58,231 as of 5 April 2021, 3:39 pm IST and stronger support is currently needed for the asset to break above $60,000 levels. 

Source: CoinMarketCap

A note was issued by J.P. Morgan on Thursday and the bank made a statement that if the volatility of Bitcoin decreases, the long-term target price could go to $ 130,000. The bank is seeing rising demand for Bitcoin from institutional investors that seek low correlation assets for diversifying their portfolios. 

Miners holding Bitcoin restricting supply, creating resistance at $60,000 

As per the data by Glassnode, just over a third of BTC’s supply has moved since November 2020 as miners continue to hold Bitcoin for longer-term gains. The situation is similar to 2017 when miners continued to accumulate BTC instead of offering the supply to buyers in anticipation of BTC price increasing.  

The data by Glassnode further pointed out that Bitcoins worth $514 million have recently been accumulated by miners, preventing the increase of supply in the market as shown in the chart below through miner’s net position change. This could be one of the biggest reasons for the price resistance at $60,000 level and further adding to the resistance is the supply crunch by the biggest investors such as Tesla, Morgan Stanley, Bank of Japan, Goldman Sachs, etc. 

Source: Glassnode

Recently, BTIG has indicated a “buy” rating on MicroStrategy, a business intelligence firm in anticipation that BTC could rise to $95,000 by 2022.

Non-Fungible Tokens (NFTs)

WazirX, a cryptocurrency exchange in India has launched its own NFT marketplace. It is one of the first marketplaces for NFTs in India, introducing a platform for seamless exchange of digital assets and intellectual properties including videos, art pieces, audio files, tweets, programs, and other digital goods and services. 

Ether makes a new all-time high above $2,100

On Friday, Ethereum surpassed the $2,100 mark, creating a new high as the price rallies 17% last week. The price support was enhanced when Visa announced facilitating crypto-based settlements on the Ethereum network. Currently, Ethereum is trading at $2,049 at the time of writing this article:

Source: CoinDCX

Billionaire investor Mark Cuban also made a comment in a recent podcast that he is extremely bullish on cryptocurrencies and that Ethereum is  “the closest we have to a true currency.” Also more data by Glassnode and as per the company’s recent tweets, users are actively withdrawing and holding ETH away from digital exchanges. An equivalent of  $41,595,132, the outflow of Ethereum has hit a one-month high of 20,422.908 ETH (seven-day moving average): 

Altcoins 

Last week, several altcoins have been on an upward trajectory. Binance Coin (BNB) has made significant gains and is currently trading at $360, up by 32% since last week. Litecoin (LTC) is currently trading at $205, up by 5% since last week. While XRP continues to surprise by a constant increase in price, up by 30% in the last week, Tron has broken all records showing an increase of 117% in the past 7 days. Chainlink (+11%), BCH (+14%), EOS (+50%), BAT (+7.2%), and XLM (+20%) have shown also an upward trend while Cardano (ADA) is currently at $1.19, down by 1.65% in price since last week.

Top trading pairs on CoinDCX  this week

% Change

WRX/BTC 859%
WIN/USDC 496%
BTT/TUSD 217%
MTL/BTC 195%

 

Losing trading pairs on CoinDCX  this week

% Change

HBAR/BNB -42%
ONE/BNB -41%
KSM/BNB -40%
SAND/BNB -36%

In conclusion, although it has been a good week for the cryptocurrency industry in general, Bitcoin is showing a price resistance at $60,000 mainly due to its supply crunch as miners continue to hold in an anticipation of a long-term price increase. The star of the week has been Ethereum as it created a new all-time-high and other altcoins followed suit with BNB, Tron and EOS showing a major upward trend. One major event to watch out for in the crypto space is Coinbase’s IPO set for April 14.