Riding on the back of positive inflation data, Bitcoin has been rallying over the last couple of days. On Thursday, it was trading at the brink of $25k—a level last seen on 13 June. However, per many stalwarts, the ongoing rally is not sustainable.
Bitcoin’s ‘sucker’ rally
Economist and Bitcoin critic Peter Schiff quite recently opined that the ongoing rally is an opportunity for investors to sell and exit the market. In a recent interview with Kitco News, Schiff asserted that if they don’t end up doing so, they’ll sink with the ship.
“It’s just going to be watershed. People are going to throw in their towel and the market is going to plunge. I think people should take advantage of the sucker rally they’ve got right now and get out. A lot of people still have profits in these tokens. People bought Bitcoin four, five, six years ago, and they have big profits… People should get out because otherwise, the market’s going to take those profits.”
As pointed out by Schiff, profitable addresses have indeed been on the rise. Per Glassndoe’s latest data, the number of addresses in profit reached a quarterly high of 26.2 million on Tuesday.
The rise in unrealized gains usually triggers market participants to cash out. The same usually has a negative impact on asset prices. Per Schiff, BTC is primed to slip down further to $10,000.
Extending his Bitcoin criticism, the economist said that the asset will unlikely experience any other high or rally like how it did last year.
“I don’t think it’s going to make a new high.”
Well, Schiff’s assertions cannot be blindly trusted. In the past, the economist had claimed that the asset will never cross $50,000. Bitcoin, nonetheless, ended up doing so a host of times last year when it double-peaked.
Is it fundamentally concerning?
Over the past two months, the Bitcoin accumulation spree was going on in full spring. With the recent price rise, however, it seems like market participants’ has applied brakes. Per Glassnode, BItcoin’s accumulation trend score has started “softening,” and the same is not a welcoming sign.
Nevertheless, it is worth noting that the dormant Bitcoin supply continues to rise. Per on-chain data, the supply last active 5-7 years back reached a 20-month high of 908k BTC on Friday, implying diamond hands continue HODLing their assets.
Well, the phenomenon that is currently unfolding is not new. During most cycles in the past, mass accumulation has taken place only around discounted prices. So, when Bitcoin re-steps into its correction phase going forward, the accumulation trend score can be expected to get refined. And with HODLers not dumping their coins, it wouldn’t be wrong to contend that there’s not much wrong fundamentally.