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Philip Swift, Bitcoin (BTC) analyst and creator of Lookintobitcoin.com, outlined four reasons why BTC is targeting $ 22,000. Both fundamental and technical factors indicate that the momentum of the leading cryptocurrency is strengthening.
The one-year HODL percentage, the decline in Bitcoin’s foreign exchange reserves, neutral funding rates and institutional build-up point towards a prolonged rally in BTC. Swift he wrote:
“1 year HODL% is still very high? Yes. Is Bitcoin Plunging From Exchanges? Yes. Funding still neutral? Yes. Do the institutions continue to buy? Yes. Great, see you at $ 22,000 in a few weeks when the price reaches 350dma x 2 the gold ratio multiplier. “
Since the start of the fourth quarter on October 1, Bitcoin’s price has risen from $ 10,773 to $ 16,730 on Binance.
The HODL percentage shows investor confidence
The Bitcoin space refers to longtime BTC holders as “HODLers”. The one-year HODL wave shows the growth in the number of investors who have held BTC for over a year.
Since the March incident, the one-year HODL wave has gone from 59% to over 62%. It is now at an all-time high, signifying a clear trend towards accumulation.
As the number of HODLers increases, it demonstrates an appetite for buying and holding Bitcoin for a long time. The ongoing trend could show that investors are expecting a broader long-term Bitcoin rally.
Funding rates are neutral
During bullish cycles, Bitcoin’s funding rates can rise significantly as long holders or buyers overwhelm short sellers.
The Bitcoin futures market uses the funding rate mechanism to ensure balance in the market. If there are longer than short, the funding rate becomes positive. In that case, the buyers must compensate the short sellers and vice versa.
The average funding rate of Bitcoin’s perpetual futures contracts is around 0.01%. Over the past few months, the funding rate has remained at around 0.01% or sometimes below it.
This shows that there is a fair balance between buyers and sellers and that the market is not yet overheated.
Bitcoin reserves are dwindling
As Cointelegraph reported yesterday, around 145,000 BTC has come out of trading in the past month.
The $ 2.3 billion monthly Bitcoin outflow suggests investors’ intention to hold their holdings in BTC for the long term.
Investors must deposit BTC on exchanges to sell their holdings. Hence, when outflows increase, it typically indicates that investors plan to hold BTC for extended periods.
Institutional accumulation is growing
In the United States, grayscale remains the preferred entry point for institutional investors in Bitcoin. The Grayscale Bitcoin Trust is the closest investment vehicle to an exchange-traded fund, as it trades publicly in the U.S.
According to Grayscale, the company now holds more than 500,000 BTC, which, at a price of $ 16,700, is worth over $ 8.35 billion.
Institutions have continued to accumulate Bitcoin as it has seen a strong recovery since early 2020. BTC’s resilience, particularly as it is consistently outperforming gold, has made the most compelling value proposition for institutions throughout the year.
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