Anyone who has bet on the course of Bitcoin this year has not been disappointed. More and more investors from different asset classes are discovering the advantages of BTC for themselves. Fundamentally, we see that there is a significant increase in the number of people holding Bitcoin. What initially sounds very positive for the price may also turn out to be a danger.
Read more about what dangers lurk for the course of Bitcoin and how on-chain data can help in this analysis, with our companion app Born2Invest. Download our app for free and read the latest financial news from around the world.
What are the risks for the course of Bitcoin?
Since 2020, a continuous outflow of Bitcoin to exchanges could be observed. This means that more BTC is constantly flowing out of the exchanges than in. This is initially to be seen as positive, as it reduces the available supply of Bitcoin.
The short supply on the exchanges, in turn, has a price-driving effect on the course of Bitcoin. On the other hand, it may also cause confusion that – despite the price increases of BTC – Bitcoin is flowing away from the stock exchanges. Who does not hold its cryptocurrencies finally on the Exchanges, is safer on the way, but cannot trade them. Differently formulated: Owners cannot sell simply and participate in such a way in profits with the course of Bitcoin.
However, this HODLer mentality can also pose a threat to the course of Bitcoin.
When are profits realized?
Almost 5 million addresses (of investors in crypto) are currently in a profit zone between 5% and 25%. So far, so good. So where is the supposed danger that is interpreted as a threat to the price of Bitcoin?
In order to find the answer, one should consider the number of addresses that are over 100% in the profit zone. In other words: These are the addresses that have at least doubled their stakes in US dollars.
Is 100% growth in the rate of Bitcoin already a reason to sell?
This number increased strongly since the beginning of the year and lies now between 6 to 7 million addresses. Despite the strong HODL mentality, the question of realizing profits arises.
When will investors take their profits? – Is a doubling of the profit already sufficient? At this point, one should not only think of the “small” private investors, but especially of institutional investors.
If a large number of investors decide to take their profits with them, that can have a negative impact on the share price of Bitcoin. Here it is important to understand that we are talking about probabilities and possibilities. At the moment we do not see any indications of this.
Bitcoin is currently the eleventh largest currency in the world. BTC is therefore ahead of currencies such as the Australian dollar, the South Korean won or the Mexican peso. The two most important precious metals gold and silver occupy first and sixth place in this ranking, respectively. Many German companies seem downright small compared to the market capitalization of Bitcoins. With future positive price developments, Bitcoin dominance can improve even further.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in CRYPTO MONDAY, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
22 Million Euros and New Investors for Finleap Connect
Finleap Connect had ventured into other European countries early on. Specifically, the Berlin-based company is active in France, Italy and...
Dakhla: a New Project for the Valorization of Pelagics
The Department of Maritime Fisheries continues the implementation of the development plan of small pelagic fisheries in the South Atlantic,...
Gold’s 15 Count: How Low Can it go Next Week?
This week, the FOMC has “injected” an additional $54.20 billion dollars of “liquidity” into the financial system. This is far...
A Stock Market Correction Appears to be Underway
We note the huge rise in money supply although not in our opening piece that looks at the Fed its...
Roche is Awarded the Distribution of Reagents in Soria for Two Million Euros
Roche will be the company to distribute reagents in Soria. According to the budget application, the amount for the supply...
Featured7 days ago
The Fintech Ecosystem in Colombia Exceeds 322 Companies
Business7 days ago
Cybersecurity Rising Among America’s Infrastructure Priorities
Biotech6 days ago
Genomcore Finalizes its Entry into the United Kingdom after Increasing its Turnover by 73% in 2021
Crowdfunding7 days ago
Valsabbina Bank and Siav Purchase 25% of MyCreditService