The cryptocurrency market has been experiencing a surge in the past few days, with Bitcoin leading the way by bouncing back from around $61,000 to above $67,000. This significant price movement has sparked speculation and discussions among investors and analysts alike.
Popular blockchain analytics firm CryptoQuant has shed light on the catalyst behind Bitcoin’s latest rally. According to a recent report by CryptoQuant, the lower-than-expected inflation data in the United States played a key role in pushing the price of Bitcoin to new highs. The revelation that the Consumer Price Index rose by 0.3% in April, lower than the expected 0.4%, hinted at a possible downward trend in inflation, making assets like Bitcoin more appealing.
CryptoQuant’s report also highlighted a decrease in selling pressure in the BTC market, as short-term holders are selling at low or negative profits. Additionally, Bitcoin balances at over-the-counter desks have stabilized, indicating that fewer coins are entering the open market.
One of the key signals identified by CryptoQuant is the underpayment of BTC miners in recent weeks, which often correlates with price bottoms. The report also pointed out potential catalysts for a sustained Bitcoin rally, including increasing demand from permanent holders and large investors. However, the report noted that this demand needs to rise rapidly to drive the price of BTC even higher.
While the Bitcoin price continues to hover around $67,000, reflecting a 2.5% increase in the past 24 hours, there are several market trends to keep an eye on. According to CoinGecko data, the premier cryptocurrency has seen a significant 10% increase in the past week. However, there are concerns about dwindling Bitcoin ETF purchases and declining stablecoin liquidity growth, which CryptoQuant suggests could hinder a sustained Bitcoin rally.
The recent Bitcoin price rally has been fueled by a combination of factors, including lower-than-expected inflation data, decreased selling pressure, and potential catalysts for further growth. While the market continues to show positive signs, investors should keep a close watch on key metrics like demand from large holders and market liquidity to gauge the sustainability of the rally. As the cryptocurrency market remains highly volatile, staying informed and analyzing on-chain data is crucial for making informed investment decisions.