Declining volume doesn't equal weakness and pullback. As you can see from this basic chart. There are been a number of instances declining volume has led to major rallies.
The more important question is whether or not supply and demand will continue to support the price of Bitcoin?
Supply Declining
The last time we saw a meaningful decline in the balance of Bitcoin on exchanges was from June 2016 to December 2016. This correlated with a rise in the price of Bitcoin from about 550 to 1100. The decline in the balance of Bitcoin on exchanges this time started in March 2020 and hasn't yet stopped. On a percentage of circulating supply basis the decline has been 3 times the 2016 decline and the price of Bitcoin went from about 5000 to 60000. Instead of doubling the price increased twelve times. In addition to this after the 2016 decline ended the price of Bitcoin continued to rise seventeen times. So the psychology being programmed into peoples minds Bitcoin moving on to exchanges is bad. ITS NOT ENTIRELY TRUE! There are conflicting facts. One MAJOR fact is during almost all of 2017 the balance of Bitcoin on exchanges was rising. Why did this occur? Demand was bringing sellers to cash out steadily over time. This leads to the final remark I have today regarding supply. We have yet to see the price get to a point which interests those holding Bitcoin to sell. Clearly they are waiting for more dollars per Bitcoin. Not just this but many price targets forecast six figure Bitcoin prices:
Investors' on-chain activity hints at Bitcoin price cycle top above $166,000
Veteran Analyst Peter Brandt Expects Bitcoin to Reach $200K
HOW BITCOIN COULD HIT $400,000 BY 2025
Demand Increasing
The ceiling for Bitcoin is high. Consider the top ten stock exchanges in the world have a combine market cap of 135 Trillion. Yes 135 Trillion and rising. I once said in 10 years I think a certain crypto I will name later would reach 2 Trillion and was called crazy. However, if trends continue we are likely to see the 135 Trillion break 200 Trillion in 10 years. So it is not at all crazy. Putting this minor rant aside the main point is there is plenty of cash available to come to the Bitcoin market. If it became universal that instead of allocating to gold financial advisors have their clients allocate to digital gold the recommended 5% the market cap would be 6.75 Trillion for Bitcoin. Also consider this. M3 Money supply is around 20 Trillion for the US Dollar. at a pace below what we recently reached and what is projected given Monetary and Fiscal policy is continued. M3 Money supply could reach 50 Trillion in 10 years. What I am saying is there is more than enough firepower (Money) to support higher Bitcoin prices. So we just need adoption. Well lets consider the recent headlines:
Oakland Athletics Baseball Team Finally Sells Ticket for 1 BTC
Mark Cuban the Next Billionaire to Go All in on Bitcoin: ‘The Number of People Who Own It Could More Than Double’
U.S. Real Estate Giant Caruso Properties Adopts Bitcoin (BTC)
AXA Switzerland joins Tesla in accepting BTC as a form of payment, while MicroStrategy pays its board using this crypto.
Bitcoin Weekly Forecast: Institutional wave of BTC adoption follows new all-time highs
The point is this. Volatility is on the decline. This does not however mean great returns have gone away. We are currently going through a breather/consolidation period. Bitcoin is in a different gear. However, calls for a major decline to $40,000 are unlikely to materialize into reality and the more likely path is towards $100,000 by July 1st. Take these specifics with a grain of salt though. No one knows for sure but the more important factor is direction which is certainly higher.
The more important question is whether or not supply and demand will continue to support the price of Bitcoin?
Supply Declining
The last time we saw a meaningful decline in the balance of Bitcoin on exchanges was from June 2016 to December 2016. This correlated with a rise in the price of Bitcoin from about 550 to 1100. The decline in the balance of Bitcoin on exchanges this time started in March 2020 and hasn't yet stopped. On a percentage of circulating supply basis the decline has been 3 times the 2016 decline and the price of Bitcoin went from about 5000 to 60000. Instead of doubling the price increased twelve times. In addition to this after the 2016 decline ended the price of Bitcoin continued to rise seventeen times. So the psychology being programmed into peoples minds Bitcoin moving on to exchanges is bad. ITS NOT ENTIRELY TRUE! There are conflicting facts. One MAJOR fact is during almost all of 2017 the balance of Bitcoin on exchanges was rising. Why did this occur? Demand was bringing sellers to cash out steadily over time. This leads to the final remark I have today regarding supply. We have yet to see the price get to a point which interests those holding Bitcoin to sell. Clearly they are waiting for more dollars per Bitcoin. Not just this but many price targets forecast six figure Bitcoin prices:
Investors' on-chain activity hints at Bitcoin price cycle top above $166,000
Veteran Analyst Peter Brandt Expects Bitcoin to Reach $200K
HOW BITCOIN COULD HIT $400,000 BY 2025
Demand Increasing
The ceiling for Bitcoin is high. Consider the top ten stock exchanges in the world have a combine market cap of 135 Trillion. Yes 135 Trillion and rising. I once said in 10 years I think a certain crypto I will name later would reach 2 Trillion and was called crazy. However, if trends continue we are likely to see the 135 Trillion break 200 Trillion in 10 years. So it is not at all crazy. Putting this minor rant aside the main point is there is plenty of cash available to come to the Bitcoin market. If it became universal that instead of allocating to gold financial advisors have their clients allocate to digital gold the recommended 5% the market cap would be 6.75 Trillion for Bitcoin. Also consider this. M3 Money supply is around 20 Trillion for the US Dollar. at a pace below what we recently reached and what is projected given Monetary and Fiscal policy is continued. M3 Money supply could reach 50 Trillion in 10 years. What I am saying is there is more than enough firepower (Money) to support higher Bitcoin prices. So we just need adoption. Well lets consider the recent headlines:
Oakland Athletics Baseball Team Finally Sells Ticket for 1 BTC
Mark Cuban the Next Billionaire to Go All in on Bitcoin: ‘The Number of People Who Own It Could More Than Double’
U.S. Real Estate Giant Caruso Properties Adopts Bitcoin (BTC)
AXA Switzerland joins Tesla in accepting BTC as a form of payment, while MicroStrategy pays its board using this crypto.
Bitcoin Weekly Forecast: Institutional wave of BTC adoption follows new all-time highs
The point is this. Volatility is on the decline. This does not however mean great returns have gone away. We are currently going through a breather/consolidation period. Bitcoin is in a different gear. However, calls for a major decline to $40,000 are unlikely to materialize into reality and the more likely path is towards $100,000 by July 1st. Take these specifics with a grain of salt though. No one knows for sure but the more important factor is direction which is certainly higher.