Delphi Digital, a market research firm that specializes in digital assets has announced that Bitcoin has bottomed. This follows a number of other prominent firms issuing press releases to the same effect. In fact, over the last month, there has been an avalanche of research showing that Bitcoin has finally reached its bottom and that the bears have finally gone into hibernation.
Bears are dead, but problems still on the horizon
This past month has seen countless market research firms say that the bear market is in hibernation. Some are even saying that the bears are dead, never to be seen again. While some of this is hyperbole, what is clear is that the statistics are showing that bears are definitely laying low for the time being.
There is a problem on the horizon, however, and it comes in the form of a stablecoin. In fact, it is among the most newsworthy stablecoins of the last month – Tether. Tether has made a splash in the news regarding its move to a new blockchain, in this case, Tron. It was lauded as a coup by many news outlets and a signal of Tron increasing importance in the blockchain ecosystem.
That initial optimism might seem unfounded as the New York Attorney General (NYAG) has set his sites on both Tether and Bitfinex. The two are bound inextricably by their parent company iFinex Inc, a crypto focused company that has its headquarters in Hong Kong but is registered in the British Virgin Islands. Delphi has detected a “sizable amount of user-sent funds from Bitfinex recently”, and passed on this information to its clients.
The scandal surrounding Tether and Bitfinex finds itself at center stage in the report issued by Delphi Digital as bad news in the cryptocurrency ecosystem has a knock on effect on other coins. While many in the industry would like the average investor to separate the coins from each other, knowing that what happens to Tether and Bitfinex will not necessarily impact Bitcoin, it is a tough sell.
The cryptocurrency market lives and dies together for the time being and if this news impacts Bitcoin negatively, the entire market could plunge unexpectedly. However, there is still enough time for cooler heads to prevail, seeing as the NYAG still has some time before they make their case.
UXTO Balances show the truth of bottoming
Barring these exceptional circumstances, Bitcoin has bottomed and is seeing the same sort of movements that it saw during the last great bull rush of 2015 to 2017. What is UXTO? It means Unspent Transaction Output and is the barometer that Delphi uses to see how much Bitcoin is being held as opposed to traded.
Holding (or hodling in crypto trading parlance) means that the market is expecting Bitcoin prices to increase, and that bears are becoming more and more sheepish. If activity increases, the UXTO falls, if people hodl then the UXTO rises. It is rising.
There is talk in mainstream financial news organizations is that Bitcoin is being pressured upwards by a variety of factors. One such factor is growing institutional involvement. More money coming into the market is forcing prices up and smaller traders out. These institutions are warming to Bitcoin due to the emergence of traditional blue-chip exchanges getting in on the action. Bakkt, in particular, is a big part of this trend. It is an exchange that is backed by the parent company of the New York Stock Exchange, the most valuable stock exchange in the world. The NYSE has ample experience with the SEC and anything a sister company does will be looked upon more favorably than a new exchange opening that does not have the pedigree that the Intercontinental Exchange has.
Added to this, there is even more pressure being put on the price of Bitcoin by the increase in on-chain transactions. These are mainly coming from Turkey and Venezuela whose people are relying more and more on cryptocurrency to get paid. While it may not be mainstream in those countries, it has added a lot of pressure on the network.
So when supply and demand meet and supply is fixed while demand continues to rise, then what happens next is clearly academic. The price is going to continue to rise and with more and more people hodling this time around, the prices could turn out t hit the stratosphere.
If we have truly hit the bottom, 18 months before the next halving of Bitcoin, then the next two years are going to be a rollercoaster ride of a bull market. The 2015 bottom was also 18 months before a halving and the results of that brought us to a point where Bitcoin has seen ashaving a low price at $3000. what could the next “low” price be after all is said and done?