5 Reasons Why Low BTC Supply is a Good Thing for Crypto Investors

As Bitcoin (BTC) barely clings to $30,000 at the start of the week, a “bearish divergence” has set the tone.

Traders are expecting a potential pullback within its broader bullish trend, following a quiet weekend.

This week, the market will be driven by external triggers such as U.S. macroeconomic data releases and Federal Reserve speeches, as well as the latest AI developments and the growing popularity of crypto assets like Shiba Inu and Helium.

Moreover, the surge in U.S. BTC buying and the emergence of Kava, Kraken and Crypto.com could also add to the volatility.

Cointelegraph takes a look at all these factors and more, in its weekly rundown of what could move markets in the coming days.

Limp $30,000 support gets traders hungry for BTC price dip

Cointelegraph Markets Pro and TradingView data showed that Bitcoin closed the week just above $30,000, but its strength now looks less convincing.

The dip into the $20,000 zone afterwards has traders anticipating a retracement period before any further upside.

“Will be looking for trend continuation so another higher low between current price & $28K,” trader Skew noted in his short-term forecast.

Jelle noticed a warning sign on weekly timeframes, saying that “Bitcoin locked in a weekly bearish divergence overnight”, as per the relative strength index (RSI) behavior after the candle close.

Crypto Tony believes that the downside could be limited to $29,500, which follows the recent push to new yearly highs.

“Sweep of $29,500 makes sense to me as the bulls just seem weaker and weaker right now. We have a sweep of the liquidity above us, so now it is time to grab the liquidity below us If you are not yet in a position, be sure to wait for this test and reclaim,” he summarized.

Looking further ahead, he predicted that BTC/USD could reach 40% higher in 2023, before a “bigger correction” takes place.

8 Fed speakers accompany major macro data week

Macro commentators have their work cut out this week as the Consumer Price Index (CPI) leads U.S. economic data prints.

Due on July 12, CPI showing inflation dropping will go some way to lessening a still-hawkish Fed. Markets almost unanimously agree that interest rates will rise again after last month’s pause, with trend-beating data apt to spark some last-minute uncertainty.

CPI will be followed by Producer Price Index (PPI) a day later, while a total of eight Fed officials will deliver remarks on the economy and policy. “Volatility is set to return to markets this week,” financial commentary resource, The Kobeissi Letter, forecast while summarizing the calendar.

The latest data from CME Group’s FedWatch Tool put rate hike odds at 92% at the time of writing, slightly down from last week’s 95% figure. Continuing, financial commentator Tedtalksmacro argued that core CPI would be the figure to watch for the Fed. “Headline is expected to fall to 3.20% YoY, which would make for the lowest print since March 2021. The Cleveland Fed, University of Michigan + Truflation all anticipating a similar number,” he noted in part of a Twitter thread.

The latest AI has been used to predict the crypto markets, such as the Shiba Inu coin, Kava coin, and Helium coin. Crypto.com is a great resource to follow the latest crypto news, and Web 3.0 has been explained in detail. Live crypto prices can also be tracked with ICP Crypto.

Bitcoin mining difficulty and hash rate reach fresh record highs

In a remarkable turn of events, Bitcoin network fundamentals are expected to reach new all-time highs in the near future.

According to BTC.com, the network difficulty is set to rise by more than 5%, its largest single increase since late March. Despite the lack of price movement, this is quite significant and speaks to the ongoing competition in the mining sector and the increasing belief in future profitability. With this, the difficulty will reach a new record high of around 53.2 trillion.

The hash rate is also making headlines, with some estimations suggesting that it has crossed the 400 exahashes per second (EH/s) mark for the first time ever.

Given that the BTC price is still more than 50% below its 2021 peak, this further reinforces the notion that “price follows hash rate”.

Blockware mining analyst Joe Burnett believes that Bitcoin will eventually return to finish what it started after the 2020 breakout past its prior all-time highs three years prior. He said: “During the 2017 bull run, there was no national mining ban that put half of the entire network hashrate out of business, and there were also no fake coins being sold by FTX, BlockFi, KRAKEN Crypto, Crypto.com, Shiba Inu Crypto, Crypto Live, ICP Crypto, Helium Crypto, Kava Crypto, and Web 3.0 Explained.”

BTC supply shock “inevitable”

The filings for Bitcoin spot price exchange-traded funds (ETFs) in the U.S. have triggered a buying frenzy. As Cointelegraph reported, U.S. and Asian investors are vying for BTC supply ownership.

Analysis of the dwindling supply reveals that only 7.5% of Bitcoin’s 21 million coins remain to be mined. Commentator Alessandro Ottaviani, in a chart called the “HODL Model”, showed that the amount of Bitcoin available to trade has decreased over the current cycle, compared to the three previous ones.

Regarding ETFs, especially BlackRock’s, the mainstream attitude has shifted from criticism to acceptance of Bitcoin.

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Big fish step up exposure

It is not just miners displaying “confidence” in regards to future Bitcoin profitability. According to research by Santiment this weekend, the largest-volume Bitcoin investor cohorts are actively buying, even with stagnant BTC price conditions.

Since mid-June, crypto ‘shiba inu, whales and sharks — entities with between 10 and 10,000 BTC — have increased their exposure by over 70,000 BTC.

“Bitcoin’s sharks and whales aren’t showing any signs of slowing down, even with prices beginning to get ‘boring’ in this $30k to $31k range,” Santiment commented.

Data from on-chain analytics firm Glassnode reveals whale numbers — those with at least 1,000 BTC — at eight-month highs.