In a rebound of more than 5% on Wednesday, BTC jumped above the market cap of $770 billion for the first time this week. While the recent rally was not so significant, it gave the digital asset enough support to remain above $40,000.
After touching a high of almost $41,500 on Wednesday, BTC pulled back and dipped below $40,000 for a brief period. However, Bitcoin increased gradually during the past 12 hours and is now trading near $40,800. In addition, BTC’s dominance stayed above 41% during the recent volatility.
“Bitcoin is currently seeing some buy pressure. We could see some short-term relief in the market over the coming days/weeks as protective positions unwind after today’s highly anticipated rate hike. However, I think Bitcoin and the crypto space are unlikely to gain significant traction in 2022. This is because the Federal Reserve is taking liquidity away from markets and people may have less money to spend on ‘risky’ investments due to surging inflation,” Marcus Sotiriou, Analyst at GlobalBlock, said.
Last week, institutional crypto investors increased outflows amid regulatory concerns around digital assets. BTC investment products saw outflows worth $70 million in the past week.
BTC’s Short-Term Holder Supply
In a major development on the BTC network, short-term holders of the world’s largest digital asset saw massive losses. “We continue to see the amount of coin supply held by the Short-Term Holder cohort decline. This can only occur when large portions of the coin supply are dormant and crossing the 155-day age threshold, becoming Long-Term Holder supply,” Glassnode said.
“STH supply reaching low levels is historically associated with the later stages of bear markets, as patient buyers send coins to cold storage for the long hold. STH supply is currently near all-time lows which is constructive for prices. However, 82% of these coins (2.51M BTC) are currently held at a loss and are in turn the most likely source of sell-side pressure,” the company added.
