Bitcoin shortage: why BTC is now looking at a $50,000 price target
Bitcoin could reach $50,000 in the near future as more and more institutions amass BTC against their fears of dollar-linked inflation.
The flagship cryptocurrency, whose market capitalisation recently surpassed that of Facebook and Tesla, fell back from its record high near $42,000. Nonetheless, its fall prompted rich traders on Ethereum Code app and institutions to buy bitcoin cheaply, further tightening liquidity against its limited supply cap of 21 million tokens.
As a result, the Bitcoin price mostly consolidates sideways, forming a structure that looks like a symmetrical triangle. Looking back, the said pattern develops when the price forms higher lows and lower highs.
Meanwhile, the trading volume decreases. Eventually, the price breaks out in the direction of its previous trend – up or down.
Bitcoin’s previous trend was bullish. Therefore, the cryptocurrency is more likely to make another upward run if it breaks out of the Triangle pattern. That should take the price above $50,000.
This is – once again – due to the textbook description of a symmetrical triangle. An asset breaks out by as much as the maximum height between the upper and lower trendlines of the pattern. In Bitcoin’s case, the height is around $14,000.
Bitcoin is seeing a breakout from its Symmetrical Triangle pattern
A move above the triangle, coupled with an increase in volumes, should take the Bitcoin price above $50,000.
Bitcoin liquidity crisis
Fundamentally, the price target looks achievable, at least according to a variety of analysts who determine their market biases based on on-chain indicators. For example, data analysts at Glassnode have highlighted Bitcoin’s biggest liquidity crunch to date in recent weeks, suggesting that this is bullish for the cryptocurrency.
„Not only are funds being withdrawn from exchanges, but coins are steadily moving into strong hands,“ the researchers said.
„In the last 30 days, around 270,000 BTC moved to entities that are considered HODLers.“
„The [Glassnode] chart might be more important than the price chart: bitcoin supply is being pulled back from exchanges at an all-time high pace,“ adds Luke Martin, an independent market analyst.
„Historically, bull cycles have ended AFTER the change in liquid supply turns positive. That reversal hasn’t happened yet.“