Since the beginning of the year, Bitcoin price has rallied 50%, leading many to believe that the bull market is back. While I am bullish in the long run, I am cautious when it comes to the next couple of months. In this article, I will look at a few short-term bullish and bearish factors and how they could affect Bitcoin price.

Let’s start with stablecoin supply.

Shout out: I got the following chart from looknode.com which has made many on-chain indicators free.

Over the last 12 months, circulating supplies of major stablecoins USDT, USDC, BUSD, and DAI have been decreasing. As a result, the total circulating supply of stablecoins went down. This indicates that some capital has left the crypto space, as stablecoins are a gateway to get capital in and out of crypto. Nonetheless, the drop was relatively moderate when compared with the steep increase of new stablecoins entering circulation throughout 2021.

Bullish BTC Indicators & Factors

With this, let’s take a look at some bullish indicators for BTC.

2-Year Holders

People who are hodling Bitcoin for more than 2 years have reached an all-time-high rate of 51%.

In other words, more than half of all Bitcoin holders have now held their coins for more than 2 years. This indicates that an increasing number of people see a long-term value in BTC.

Short-Term Holder SOPR

At the moment, we see a strong short-term holder SOPR. The green spikes indicate that short-term holders have begun to make steady profits. This change is the basis for the market to enter a sustained upward trend.

In addition, there was a lot of positive news for Bitcoin recently. Here are a few examples:

The Bearish Factors

However, there are also several reasons that speak in favor of Bitcoin price going down in the near term.

Geopolitical Issues

In general, the geopolitical situation is deteriorating. While it remains to be seen whether there will be a quick end to the war in Ukraine, the next conflict between the USA and China is already looming in the background, leading to more uncertainty as to what consequences this will have.

Economy

One thing is clear, the consequences of the ongoing war already have an increasingly negative impact on the global real economy and the financial sector — especially in the industrialized western countries.

As the recent surge implies, the US Bond market smells that something is going very wrong with the economy and that contrary to what many believe, things are not getting better.

Inflation

Meanwhile, energy prices remain too high which pushes up the consumer price index CPI.

As a result, central banks increase interest rates which are thought to have a negative impact on asset prices. However, I am not so sure about this anymore as my deep dive into the data has shown that the effect of rate hikes on Bitcoin is lower than what many believe.

And in any case, it seems as if the groundwork is laid for the Fed to soften inflation targets, as this Financial Times article indicates:

Conclusion

As always in the last 12 months, there is a lot of uncertainty at the moment. On the one hand, we have clear signs that the bottom is in. At the same time, the political and economic environment is so volatile that you should expect anything. In addition, there is another reason why I am currently acting very cautiously in the crypto market. Historically, crypto bear markets have never ended immediately after bottoming. Instead, there were still many months of sideways movement, with strong ups and downs at times.

My long-term outlook, on the other hand, remains positive precisely because of recent developments. I still see Bitcoin as a bet against the slowly collapsing fiat system.

Disclaimer: This article is intended for informational and educational purposes only. It should NOT be treated as financial advice.

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