‘Bitcoin bubble could end up helping BTC’ head north, here’s how
- Bitcoin bubbles could help long-term adoption, according to an analyst.
- Maximalists remain bullish on BTC despite short-term concerns.
Matt Huang, co-founder of Paradigm ventures, believes that Bitcoin has gone through bubble phases that affect its overall health. According to him, bubbles are created when short-term traders start buying BTC due to a rise in prices.
However, as demand for BTC during that period peaks, prices begin to drop and the bubble bursts, hurting short-term investors.
Read BTC’s price forecast 2023-2024
Make the case for bubbles
Huang is of the opinion that these bubbles could end up helping Bitcoin in long term. This is because every time the market sees a bubble, the use of Bitcoin increases and the cryptocurrency becomes more accepted.
The behavior of large addresses seems to indicate that we may be experiencing a Bitcoin bubble now. In the past few days, whales have dumped over 200 million BTC, and the open interest in Bitcoin has increased.
This shows that high volatility is to be expected going forward for Bitcoin.
#Bitcoin whales dumped over $200m yesterday, while open interest has grown by 20k #BTC the last days.
I don’t see any meaningful spot accumulation outside of stablecoins being converted to #Bitcoin.
I will take off @balajis bet. pic.twitter.com/N7G1q1bMpJ
— James V. Straten (@jimmyvs24) March 18, 2023
Another indicator that suggests that Bitcoin may be in trouble in the short term is the large number of addresses in profit. They have reached an 11-month high of 31,579,467,387.
These factors can negatively affect Bitcoin’s price. But it should be noted that the royal coin’s adoption also increased in the last year. According to data from Glassnode, the Bitcoin network’s generated fees have increased in recent days.
Source: glassnode
Too much optimism?
Despite all the negativity surrounding BTC, Balaji Srinivasan, the former CTO of Coinbase, remains optimistic about Bitcoin’s future. He went so far as to bet 1 million dollars on Bitcoin hitting a million dollars in the next 90 days.
The ex-Coinbase CEO believes that the US will undergo hyperinflation soon, leading to a decline in faith in the USD and an exponential increase in interest in BTC.
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I’m joining a Twitter room now to talk about the rationale.
In short, the Fed has chosen to monetize the debt in the messiest way possible: an orgy of money printing and bank runs. 150 billion dollars has already reached the banks and more is on the way.
My effort is a way of ringing the fire alarm… pic.twitter.com/ARKsvBE469
— Balaji (@balajis) March 18, 2023
While Balaji’s extremely optimistic prediction about BTC may not come true, it has changed the sentiment of traders in the market. As a result, long positions taken in favor of BTC have increased in recent days.
Source: coinglass
