Bitcoin (BTC) price has dropped to $31,000, just short of its 100% gain so far this year. The cryptocurrency is now trading at $27,100 and there are 3 reasons why it will have “limited growth” for the rest of 2023.
This was stated by an analyst known as MAC_D on May 15, taking market data from Explorer crypto quant, He pointed out that the first reason he thinks the cryptocurrency’s growth is limited is the lack of bitcoin in the United States.
“In the past, when US institutional investors’ holdings of BTC increased during major bull markets, the price increased significantly,” he noted. However, this scenario is not currently happening, as the graph shows.
There has been a steady decline in BTC holdings by US institutional investors in recent months. “This is probably due to the fact that they have switched from US exchanges to global and decentralized exchanges due to the ongoing regulation of the cryptocurrency market by the SEC,” he said.
The second reason you see limited upside for bitcoin is because of the drawdown of stablecoins. In February 2022, it reached $99 billion and now stands at $71.1 billion. “The total supply of stable coins shows how much purchasing power there is in the cryptocurrency market” and which in this case has been reduced, he explained.
The supply of stable coins has been declining for about a year and a half. Source: Cryptoquant.
Finally, as the third reason, analysts perceive the absence of “new smart money players” (experienced or institutional investors) transferring bitcoins. He highlighted that when BTC dropped to $15,800 due to the FTX crisis, the proportion of long-term holders was close to 80% and hasn’t dropped much from there.
Over 70% of bitcoin holdings have been held for more than 6 months. Source: Cryptoquant.
Considering these 3 factors, the analyst expressed that “It is true that there is a possibility of further growth in the price of BTC, but bigger issues like recession in the second half of this year could lead to a fall in the price of the asset.” Are.”
Given this, he added that “it will take a little more time” before the movement and general uptrend for bitcoin continues. As such, he asserted that the cycle could be similar to the repeated ups and downs in 2019, rather than the consistent rise seen in 2015.
Meanwhile, as Cryptonoticius reported, other analyzes argue the opposite way, with bitcoin going into a massive bull run this year. This is despite the potential downsides that are expected in the short term.