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Bitcoin: Less Borrowed Funds, Longer Holding

29 Oct, 2021
Bitcoin

Compared to the previous all-time high in March, a long-term-holding investment strategy is dominating interest in Bitcoin this time around. The use of borrowed funds and leverage in futures trading has fallen from 70.1% in April to 44.6% now. This diminishes Bitcoin’s volatility because price changes lead to position liquidations less frequently.

Image source: glassnode.com

Investment demand received a boost from the approval of a Bitcoin futures ETF. Now, every American with access to the stock market can invest in cryptocurrency. The regulator’s openness to digital assets has impacted Bitcoin futures trading, as well. On the Chicago Mercantile Exchange, trading volume has set a new record of $7.7 billion, and open interest in contracts has risen by 265% in one month.

Image source: glassnode.com

After previously reaching $60,000, holders have offloaded part of their reserves, taking profit from the autumn rally. Now, they’re continuing to hold their coins despite the cumulative growth of assets by a value of 2.4 million BTC since the spring, with the expectation that Bitcoin’s climb will continue.

Image source: glassnode.com

Bitcoin’s volatility is still high compared to gold or stock indices. However, it’s decreased from 300% in 2013 to its current level of 70%, while its growing user base and decreasing share of margin funds will only add to price stability overall.

Image source: BofA Global Research

Right now, Bitcoin is trying to stabilise above the pivotal $60,000 mark, with a number of technical experts hinting at the possible formation of a double top candlestick pattern.

Image source: StormGain cryptocurrency exchange 

Nonetheless, institutional interest is on the rise, and well-known financial organisations are forecasting that Bitcoin will supersede gold as a safe-haven asset. Combined with rising inflation around the world, this creates an opportunity for Bitcoin to rise to new highs.

The StormGain Analytical Group

(a platform for trading, exchanging and safeguarding cryptocurrencies)

 

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