The supply on centralized exchanges has continued to fall, so the market seems to be in the money accumulation phase. Juthica Chou recently explained that investors use Bitcoin as a hedge against inflation due to the COVID-19 pandemic.
The level of Bitcoin reserves on cryptocurrency exchanges has dropped, showing investors are not ready to sell. In other words, the supply on those platforms allows measuring the sentiment of investors in the market.
Since August, investor sentiment has been bullish on the future of Bitcoin. For that reason, they do not want to overlook their holdings in the pioneering cryptocurrency market.
The last week has been extremely strong for Bitcoin as it has consolidated between USD 59,743 and USD 64,242. In that way, the crypto asset has kept almost all of the profits it generated in October.
The Bitcoin Reserves that Cryptocurrency Exchanges Own
A report from Glassnode indicates that the supply on centralized exchanges has continued to decline in the fourth quarter. That document shows that daily withdrawals on those platforms have reached around 5,000 BTC.
In other words, it seems that the market is in the money accumulation phase. Investors are buying as much Bitcoin as they can and consolidating their holdings until better prices come.
Those investing in BTC are postponing the sale of their assets until there are better conditions in the market. That behavior is contrary to all previous trends in bearish markets.
Market analysts expect that situation to continue at least until December of this year. They predict that the price of the crypto asset could hit an all-time high of USD 100,000.
Investors Use Bitcoin as a Hedge against Inflation
Juthica Chou, Head of OTC Options Trading and Bank Kraken, recently spoke about the uses of Bitcoin by investors. She explained that the pioneering cryptocurrency represents a hedge against inflation due to the COVID-19 pandemic.
The executive warned that people need to understand that the cryptocurrency market has inherent volatility. Furthermore, she stressed that investors should consider their level of risk tolerance before including Bitcoin in their portfolio.
Analyst Vildana Hajric stated that analysts had anticipated Bitcoin’s outstanding performance in recent days, Bloomberg reported. She noted that some investors believe that a recovery from the pandemic would lead to higher inflation levels. For that reason, they are hoarding the crypto asset as a hedge against the hard times to come.
For his part, Kapil Rathi, CEO of CrossTower, said that institutions have started increasing allocations to Bitcoin. He said that this may have happened due to the impending launch of the ProShares exchange-traded fund (ETF).
Throughout its history, Bitcoin has shown that it is capable of recovering from the worst crises. In addition, a growing number of investors believe that it is necessary to be attentive to the changes that this asset can bring. Several analysts have speculated that its price could reach USD 100,000, but it is just a matter of time before that happens.
By Alexander Salazar
