For analysts and investors alike, it is essential to understand the variables that influence price action in the complex world of cryptocurrency markets. Ali Martinez, a well-known cryptocurrency expert, recently provided x.com/ali_charts/status/1791128319599022361″ target=”_blank” rel=”nofollow”>perspectives on fluctuations in the price of bitcoin by applying the basic economic theory of supply and demand.
Understanding bitcoin Prices Through Supply and Demand
It is worth noting that the price movement of any asset, including cryptocurrencies, is determined by the fundamental rules of supply and demand. The price of an asset tends to decrease when supply exceeds demand, while prices typically increase when supply cannot meet demand.
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Thus, Ali Martínez has deduced the price of the crypto asset and the behavior of the holders by applying the method and other on-chain metrics. Martínez's analysis demonstrates how fluctuations in market purchasing interest and the availability of bitcoin They are key factors that influence the trajectory of their prices.
According to Martínez, bitcoin's Realized Cap saw a significant increase in mid-March when btc reached a new all-time high of $73,000. This indicated that most long-term btc holders were likely making profits at the time.
As a result, several investors sold their holdings, causing a sharp increase in profits. Following gains in March, long-term holders felt confident adding more 70,000 btc to their investments at these prices.
Meanwhile, when the growing supply of bitcoin in the market exceeded demand, the currency saw a substantial rise. correction from the $73,000 level to the $57,000 level.
Since short-term holders are more likely to sell their holdings due to price volatility, this drop took bitcoin below its realized price for short-term holders, inciting fear in the market. However, despite investor concerns, the short-term fork's realized price at the $65,500 level acted as an accumulation point.
Based on this principle, Martínez believes that the probability of bitcoin continuing its upward trajectory will only increase when demand for the cryptocurrency begins to exceed the supply of btc available on the market.
Using btc on exchanges to support principles
Martínez has stressed that the btc available on crypto exchanges can be used to confirm these laws of supply and demand. Additionally, he noted that more than 30,000 btc were transferred to private wallets for long-term storage in May, indicating confidence among holders in bitcoin's potential value.
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observing The price of bitcoin Using MVRV extreme deviation price bands, Martínez cited a pullback above the +0.5σ price band at $64,600. Historically, such a rally has caused btc to test the 1.0σ price range, which is supported by rising demand. Meanwhile, this price range currently remains at approximately $77,000.
Currently, the price of bitcoin is trading at $66,275, indicating an increase of over 5% in the past week. Although prices have risen, its trading volume has decreased by 24%, while its market capitalization has increased by 0.23%.
Featured image from iStock, chart from Tradingview.com