The lack of volatility over the past week could be "the calm before the storm," Glassnode says.
Bitcoin is struggling to shake off its recent bearish turn. At the time of writing, it’s fallen by 5.75% over the past seven days — hovering at about $32,500.
But according to a number of analysts, the cryptocurrency’s holding pattern might be about to end.
Glassnode kicked things off by describing the past week’s market activity as “the calm before the storm.”
On its blog, it revealed that computing power is beginning to return to the Bitcoin network after miners were taken offline by China’s recent crypto clampdown.
Meanwhile, Katie Stockton of Fairlead Strategies has suggested that “a breakout is more likely than a breakdown.”
She believes that the Bitcoin markets are now overdue for a dramatic move, and this is more likely to be in bullish territory given how “strong support” for BTC remains at $30,000.
In her view, continual daily closes above $35,500 — which represents the 50-day simple moving average — would allow Bitcoin to advance to the next resistance level that lies at $44,000.
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One potential point of concern lies in how Bitcoin’s performance has been rather lackluster against a backdrop of surging inflation in some of the world’s biggest economies.
The latest data shows that inflation in the U.S. has risen by 5.4% — and all of this means the dollar in a consumer’s pocket buys a lot less than it did 12 months ago. This is the sharpest rise since the summer of 2008, and is undoubtedly linked to aggressive quantitative easing programs that were launched in response to the coronavirus pandemic.
Over in the U.K., inflation stood at 2.5% in the 12 months to June — far beyond the Bank of England’s intended target of 2%.
In theory, such dramatic rises in inflation are designed to make Bitcoin more appealing. That’s because of how it has a fixed supply of 21 million, with the number of new coins entering circulation gradually decreasing over time.
With BTC down 6.45% since July began — meaning the world’s biggest cryptocurrency is on track to secure its fourth consecutive month of losses — there are signs that issues surrounding regulation are weighing more heavily on traders’ minds.