According to one analyst, Bitcoin is on track to hit $22,000: he cites four factors that could boost its momentum
Philip Swift, analyst at Bitcoin (BTC) and creator of Lookintobitcoin.com, has outlined four reasons why BTC is headed for $22,000. Several fundamental and technical factors indicate that the momentum of the main cryptocurrency is strengthening.
The percentage of HODL for one year, the decline in Bitcoin reserves on exchanges, neutral funding rates and institutional accumulation suggest a sustained increase for BTC. Swift explained:
„Is the % of HODL for one year still very high? Yes, it is. Are people taking Bitcoin away from exchanges? Yes, they are. Is the funding rate still neutral? Yes, it is. Are the institutions still buying? Yes, they are. Well, see you at $22,000 in a few weeks when the price reaches the 350 day x 2 moving average of the Golden Ratio Multiplier“.
Since October 1, the beginning of the fourth quarter, the price of Bitcoin has increased from $10,773 to $17,300 on Binance.
BTC/USD daily chart from October 1
The daily chart of BTC/USD from 1 October. Source: TradingView.com
HODL percentage shows investor confidence
The Bitcoin community defines long-time BTC owners as „HODLer. The One-Year HODL Wave represents the growth in the number of investors who hold BTC for more than a year.
Since the collapse in March, the One-Year HODL Wave has grown from 59% to 62% and more. It is currently at an all-time high, indicating a clear trend of accumulation.
The One-Year Bitcoin HODL Wave
The One-Year Bitcoin HODL Wave. Source: lookintobitcoin.com
When the number of HODLer increases, it shows an interest in buying and storing Bitcoin for a long time. The current trend may suggest that investors expect a larger increase in the long term.
Funding rates are neutral
During bullish cycles, Bitcoin’s funding rates can rise significantly while long or buyers overwhelm short-sellers.
The futures market on Bitcoin uses the funding rate mechanism to ensure balance in the market. If there are longer than short, the funding rate becomes positive. In this case, the buyers have to compensate the short sellers, and the same is true for the opposite case.
The average funding rate of perpetual futures contracts on Bitcoin is around 0.01%. In recent months, the funding rate has remained close to this value, falling below it on some occasions.
This shows a fair balance between buyers and sellers, indicating that the market is not yet overheated.
Bitcoin’s reserves on exchanges are decreasing
As reported yesterday by Cointelegraph, BTC 145,000 left the exchanges in the last month.
Bitcoin’s monthly outflow from the exchanges, equivalent to $2.3 billion, suggests investors‘ intention to hold on to their BTCs over the long term.
Investors must deposit Bitcoin on the exchanges in order to sell them. As a result, increased outflows usually reveal that investors expect to hold BTC for extended periods of time.
Institutional accumulation is growing
In the United States, Grayscale remains the preferred Bitcoin access point for institutional investors. Grayscale’s Bitcoin Trust is the closest investment vehicle to an exchange-traded fund, being publicly listed in the United States.
According to Grayscale, the company now owns more than BTC 500,000, which at a unit price of $17,000 is worth over $8.5 billion.
The institutions have continued to accumulate Bitcoin during its strong recovery since early 2020. BTC’s resilience throughout the year, in addition to its consistently better performance than gold, has made its function as a value reserve a more convincing aspect for institutions.