Cryptocurrency

BTC Fights With $21K But is Another Drop Coming?

This week’s price chart shows that BTC fighting with the $21K support level, but it has also formed a bearish descending channel. The bullish momentum of the crypto currency is expected to be weakened by inflation, which is expected to slow the rate at which it is circulating. In addition, the price is dominated by long-term holders, who currently own a majority of the cryptocurrency.

Bitcoin’s price has formed a bearish descending channel

Technical indicators are showing signs of a possible bearish reversal. The MACD and Stochastic oscillators have given bearish signals, while the RSI is below 50. Bitcoin has been trading inside of a bearish descending channel since April 14. On Friday, it bounced off the support line of the channel, but failed to break through the horizontal support area of $39,000. In addition, two-hour RSI has fallen below 30, signaling a bearish move.

After forming the descending channel, Bitcoin has been trending downward for the past two months. A false breakdown occurred in late May and traders would have been right to sell when the price was low. This bearish position would have continued until the mid-July breakout. The ascending and descending triangles are formed when a price crosses a trend line with a sloped edge. The right triangle is the most important pattern to look for since it signals an impending breakout from the previous bullish trend.

Ethereum’s circulating supply is decreasing at a rapid rate

The deflationary effect of Ethereum has generated much attention in late 2021, and this debate has since spread to social media. The argument that Ethereum is deflationary stems from the August 2021 upgrade. Each Ethereum transaction destroys a certain percentage of its circulating supply. Therefore, during times of high transaction activity, the circulating supply can drop below zero, meaning more coins are destroyed than created.

There is a large supply of ether, the native cryptocurrency of the Ethereum network. It is designed to decrease in value as the network uses it. Because the supply is decentralized, a single block can be a hundred thousand ethers. However, the supply of ether can grow by millions of times faster than the rate of inflation. As a result, it is important to understand the underlying economics of Ethereum’s deflationary trend.

Long-term holders own the majority of bitcoin

Cryptocurrency investors are increasingly exposing themselves to cryptocurrencies, but their holdings are still small in comparison to those of early adopters. Among the largest investors, 1% of the total 19 million Bitcoin in circulation are held by the top ten percent of accounts. These accounts collectively own five million Bitcoins, the equivalent of $232 billion. That concentration may undermine the original purpose of Bitcoin, but it could ultimately benefit the richest investors.

Despite this growing concentration in ownership, most bitcoin is held by long-term holders. Governments, funds and companies can purchase cryptocurrencies. The supply distribution of bitcoin shows that most of the cryptocurrency is held by the large, non-exchange entities, such as whales and humpbacks. Governments and other non-exchange entities can also buy bitcoins. Larger entities are likely to be institutional investors, while smaller, retail investors hold a large portion.

Inflation expected to hurt bitcoin’s bullish momentum

There is a large number of factors contributing to a rise in the U.S. inflation rate, including a war in Ukraine and supply chain bottlenecks. This is a key issue for the Federal Reserve, which is trying to balance raising interest rates and not spark a U.S. recession. Inflation is a concern for many investors, but not necessarily for Bitcoin. Here are a few factors that could hinder the bullish momentum of Bitcoin in 2018.

While inflation is a major concern for most people, it is important to remember that digital assets are a hedge against other types of investments. Gold has always been considered a safe haven asset, and this is also the case for Bitcoin. The rise in demand for digital assets may well be an indication of government spending and censorship resistance. It is also possible that the U.S. dollar is weakening as well. Share your thoughts with help of write for us

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