Bitcoin isn’t likely to enter a downtrend anytime soon, with strong fundamentals supporting its current trajectory, says a researcher at crypto product provider 21Shares.
“The structural imbalance between surging demand and a rapidly vanishing supply base makes a prolonged correction increasingly unlikely,” 21Shares crypto research strategist Matt Mena told Cointelegraph.
“There are far more positives than negatives right now,” Mena added.
Exchange, OTC Bitcoin supply at all-time lows
Mena said that the Bitcoin (BTC) supply held on crypto exchanges and over-the-counter (OTC) desks continues to stay at an all-time low while demand for the cryptocurrency continues to rise.
”On the supply side, the fundamentals remain even more skewed,” he said.
Bitcoin reached a new all-time high of $122,884 on Monday, and Bitfinex said that new buyers entering the Bitcoin market are seen as price-agnostic and are scooping up the cryptocurrency faster than miners can supply it.
Bitwise head of research André Dragosch pointed out on Friday that the lack of Google search interest for the term “Bitcoin” could indicate a lack of interest by retail investors.
“Bitcoin is at new all-time highs, but retail is almost nowhere to be found,” Dragosch said.
Bitcoin’s new high of $122,884 came just days after it broke its all-time high of $111,970 on July 9, before entering an uptrend that extended into the weekend.
Bitcoin is trading at $117,804 at the time of publication, according to CoinMarketCap data.
Mena said that in the first half of this year, “US-listed Bitcoin ETFs have already absorbed several multiples of the BTC that will be mined this year.”
“That doesn’t even include corporate treasury buyers, who continue to add quietly in the background,” he added.
Macro risks could jeopardize Bitcoin uptrend
However, Mena cautioned that a reversal can’t be ruled out entirely.
“It is certainly possible that Bitcoin consolidates, or even sees a pullback,” he said, flagging two macro risks that could weigh on the crypto market:
“If Trump’s proposed tariffs end up being more severe than markets currently anticipate, or if Powell signals that rate cuts are further off than expected, we could see risk assets broadly reprice lower, including Bitcoin.”
21Shares forecasts that an extended price drawdown over the next six months unlikely “is unlikely,” Mena said.
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“Once summer ends and liquidity returns, we expect upside momentum to resume,” he added.
“What’s truly remarkable is that Bitcoin is setting new all-time highs during the most illiquid, seasonally weak part of the year,” Mena said.
Historically, the third quarter of the year has been Bitcoin’s weakest-performing quarter, averaging just a 6.32% return since 2013, according to CoinGlass data.
“Historically, summer is when markets stagnate — traders are on holiday, volume dries up, and price action flattens,” Mena said. “But this cycle is defying that norm.”
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
