on the crypto
With bitcoin that more than doubled the price since the "black Thursday" of almost two months ago, almost 85% - or 25,79 million - of addresses holding the cryptocurrency are now "in the money", according to the intelligence blockchain IntoTheBlock. However, the current state of the bitcoin market warns of the possibility of a post-halving price pullback.
Most of the addresses are profitable
The number one cryptocurrency by market value is trading near $ 10.000 at press time - up nearly 160% from the low of $ 3.867 on March 12th. An address is said to be "in the money" if the current price of the bitcoin is higher than the price at which the coin was purchased or sent to the address.
While 85% of addresses are in the money, 10,8% or 3,28 million addresses are "out of the money", that is, they have acquired coins at an average price higher than the current market price. The remaining 4,1% (1,24 million) is "at the money", which means that the average price at which they acquired their bitcoin is around current market levels.
Such a structure may not bode well for short-term cryptocurrency. With most addresses already in a profitable state, some observers predict that sales pressure will emerge over the weekend or following the halving of the mining reward scheduled for May 11th.
Greater participation in retail
A post-halving decline seems quite plausible because retail participation has increased in recent months. The number of addresses with at least 0,1 BTC has started to increase exponentially since February and has recently risen to a record high of 3.014.888, according to Glassnode data.
Address growth also continued as bitcoin prices fell from $ 10.000 to one quotation of $ 3.867 in the first half of March. Put simply, some investors appear to have acquired coins for less than $ 5.000 and now have a yield in excess of 100%. Earnings of this magnitude can induce several small traders to freeze profits at current prices.
The number of big traders has increased
The potential bullish impact of the halving on the bitcoin price has been widely discussed in recent months. At the same time, the participation of large traders, commonly known as whales, macro-traders and institutions has increased. The number of addresses that hold at least 10.000 bitcoins has recently increased at most since August.
The pullback would be temporary
While the cryptocurrency may be under pressure after halving, analysts are confident that the drop would be short-lived. This is because the current macro-environment could probably strengthen bitcoin's vision as a hedge against inflation.
Not only is the pace of expansion of the bitcoin supply expected to drop 50% next week, but the reward cut is taking place at a time when major central banks are pumping unprecedented amounts of liquidity into the system to counteract negative impact of the coronavirus epidemic on the economy.