Bitcoin’s rally in 2023 has caught the attention of many investors, and according to a report by Bank of America Corp., the rally may have room to run. The strategists at the bank believe that flows between cryptocurrency exchanges and personal digital wallets suggest strong support for Bitcoin. The report indicates that a net $368 million of Bitcoin was sent to personal wallets in the week through April 4, which is the second-largest net Bitcoin outflow from crypto exchanges this year.
According to the report by Bank of America, when investors transfer tokens from exchange wallets to their personal wallets, it indicates their intention to hold them, which means a potential decrease in sell pressure. The acronym “HODL,” which is a crypto-sector meme, refers to the idea of holding onto tokens for the long term. The report suggests that concerns stemming from the US regulatory crackdown on digital-asset platforms may have triggered the efflux from exchanges.
Analysts Predict Bitcoin Could Reach $33,000
Bitcoin has climbed above $30,000 for the first time since June 2022, and its year-to-date surge has outstripped major asset classes. The rally has sparked a debate on why the largest token is rebounding from a rout in 2022. Some analysts argue that expectations of eventual Federal Reserve interest-rate cuts are bolstering riskier investments like crypto. Other theories include the coin’s ability to skirt stress in the banking sector or its potential to hedge inflation as a kind of digital gold.
Bitcoin’s rally is showing no signs of slowing down, and analysts predict that it could reach $33,000 before any meaningful technical correction takes place. According to Nathan Batchelor, managing partner at analytics platform Biyond Trader, “Bitcoin has stopped reacting to bad news. This is a tell-tale sign of a strong buyers’ market.”
Traders are waiting for another signal to confirm Bitcoin’s breakout, according to Garry Krugljakow, founder of 0VIX, an open-source protocol for lending and borrowing in blockchain-based decentralized finance, or DeFi. Economic data due this week, particularly Wednesday’s US consumer price index, could provide that cue. The median estimate in a Bloomberg News survey calls for a 5.1% jump in March from a year earlier.
Ethereum Inflows to Crypto Exchanges at a High
In contrast to Bitcoin, the net inflow of Ether to crypto exchanges in the week through April 4 was the largest of 2023, according to Bank of America. This comes ahead of the Ethereum blockchain’s biggest software upgrade since last year’s Merge called the Shanghai upgrade. The report suggests that while BofA strategists do not expect the event to directly drive selling pressure, they do foresee heightened volatility around the shift in part due to decreased liquidity, exchange inflows, and derivatives activity.
Ether, the largest token after Bitcoin, is up about 55% so far this year, roughly in line with a gauge of the top 100 digital assets. Ether slipped 1.7% to $1,863 as of 11:20 a.m. in Tokyo on Wednesday, while Bitcoin shed less than 1% to hover around $30,000.
Conclusion
The report by Bank of America suggests that Bitcoin’s rally may have room to run, and flows between cryptocurrency exchanges and personal digital wallets indicate strong support for the token. The rally has sparked a debate on why the largest token is rebounding from a rout in 2022, with some analysts suggesting that expectations of eventual Federal Reserve interest-rate cuts are bolstering riskier investments like crypto.
Source: https://www.cryptopolitan.com/bitcoin-outflows-signal-strong-support/