Bitcoin (BTC) is currently trading around $92,000, but could a significant price increase be on the horizon? Glassnode co-founders Jan Happel and Yann Alleman, known as Negentropic, believe it’s possible, drawing parallels to past market behavior.
Comparing Past and Present
Negentropic points to the period between December 2020 and February 2021 as a similar market phase. They observed that during that time, a price correction coincided with liquidity outflow, yet network growth remained strong. The subsequent price rebound followed a renewed influx of liquidity. This suggests that a similar pattern could play out again.
Liquidity: The Key Factor?
According to Negentropic, the key to a Bitcoin price pump lies in liquidity. If liquidity returns to the market without the price dropping significantly, and network growth stays positive, a price surge could occur.
Profit-Taking Needs to Cool Down
Swissblock, another firm co-founded by Happel and Alleman, adds another layer to the analysis. They note that significant profit-taking around the $90,000-$100,000 mark has been a factor. However, this selling pressure seems to be easing. For sustained upward momentum, this profit-taking needs to stabilize, avoiding large sell-offs that create price spikes.
The Bottom Line
While there’s no guarantee of a Bitcoin price pump, the analysis suggests that a combination of returning liquidity and sustained network growth, alongside a decrease in profit-taking, could be the catalyst for a significant price increase. As always, investors should proceed with caution and conduct thorough research before making any investment decisions.
