Bitcoin Drops Whilst on-chain Metrics Remain Very Bullish

GB Market Commentary 07/04/2022

by Marcus Sotiriou

Bitcoin fell yesterday after the minutes from the Federal Reserve’s March meeting were released. It was reported that Fed officials reached an agreement to reduce the central bank balance sheet by $95 billion a month, starting in May. This resulted in the S&P 500 falling by almost 1% as Bitcoin dropped by around 5%.

Despite the fears around the Federal Reserve tightening, on-chain metrics are very bullish. Data from Glassnode shows that last month was the 2nd largest Bitcoin exchange outflow month of all time. The other two months which are in the top 3 include October 2020 and July 2021, which both preceded incredible rallies.

Furthermore, Bitcoin’s 30-Day illiquid supply change is increasing at its highest pace since December 2020, which was right before a price surge. If the history of these indicators repeats then a bull-market could be upon us in the coming weeks. I am sceptical of this occurring due to the macro factors at play, so I think price will remain choppy and range-bound.