Key Points
- Bitcoin’s price reached new highs above $73,000 on March 12, driven by increasing institutional demand.
- Investors are moving Bitcoin to cold storage, tightening market supply and potentially driving the price up further.
Bitcoin’s price soared to unprecedented levels above $73,000 on March 12, indicating its entry into the price discovery phase.
The demand from institutions for Bitcoin is on the rise, even as the cryptocurrency’s price continues to hit historic highs. On March 12, on-chain data analysis revealed the main catalysts behind this Bitcoin price surge.
Bitcoin Market Supply Tightens
In the early hours of March 12, Bitcoin’s market capitalization briefly exceeded $1.5 trillion, as prices rose to a new global peak of $72,967. The bullish narrative for this week’s Bitcoin price surge was set by announcements from BlackRock and MicroStrategy, two of the largest institutional holders of Bitcoin.
BlackRock, in its recent filing with the United States Securities and Exchange Commission (SEC), outlined plans for its Global Allocation Fund (MALOX) to incorporate Bitcoin ETFs into its portfolio. While this decision is still weeks or months away, it sparked hopes for increased demand for Blackrock’s IBIT ETF, which already held over 204,000 Bitcoin as of March 12.
Similarly, Michael Saylor, CEO and Co-Founder of MicroStrategy, announced the purchase of an additional 12,000 Bitcoin, bringing its total stash to 205,000 Bitcoin.
Positive Reactions Trigger Price Uptick
While these two events dominated media headlines, on-chain data showed how traders’ positive reactions triggered the price uptick. IntoTheBlock’s exchange netflow metric tracks the difference between deposits and withdrawals made across crypto exchanges on a given day. A negative exchange netflow often positively impacts prices in the short-term, as it means that more coins are withdrawn from the market supply.
On March 11, Bitcoin holders moved 4,470 Bitcoin, valued at $520 million, from exchange-hosted wallets into cold storage. This indicates that despite Bitcoin prices trending at record highs, investors are playing the long game, moving coins into cold storage rather than seeking short-term profit-taking opportunities.
Negative exchange netflows effectively reduce the number of coins readily available to be traded at the spot markets. When this coincides with a surge in market demand, it often puts upward pressure on the asset price.
On March 12, Bitcoin was trading at around $72,000, meaning that over $520 million worth of Bitcoin had been removed from the market supply within the last 24 hours.
The last time Bitcoin recorded higher levels of exchange withdrawals was on Feb. 27, with a netflow of 8,050 Bitcoin recorded. As expected, the Bitcoin price surged 26% from $50,900 to $63,900 within 48 hours. If this bullish pattern repeats, the 4,750 Bitcoin outflows recorded on March 11, could clear the path for Bitcoin price to break above $75,000 in the days ahead.
Critical market trends suggest that Bitcoin’s price could be on the verge of another leg-up in the days ahead. With Bitcoin now in the price discovery phase, virtually 100% of the 52 million total Bitcoin holder addresses are now in a profitable position. This could lead to a bullish cycle of declining market supply amid rising institutional demand from MicroStrategy and BlackRock.
Without any resistance cluster above the current prices, Bitcoin bulls now have their sights set on the next milestone price target at the $75,000 territory. But in the event of a bearish pullback, the bull could regroup and mount a formidable support buy-wall at the $68,560 zone. Over 6.6 million existing holders had acquired 2.9 million Bitcoin at the maximum price of $68,560. With bullish tailwinds from the recent market activities of key stakeholders like BlackRock and MicroStrategy, most of them could opt to hold rather than sell. This curtailed selling pressure combined with the overwhelmingly positive media sentiment could see Bitcoin price stage an instant rebound from $68,000.
