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The price of Bitcoin Bitcoin enjoyed some recovery in the second half of the week as bulls finally got a chance to stretch their feet, after almost three weeks of intense sell pressure.
Trump’s tariffs severely impacted the price of Bitcoin earlier this month. However, he recently pumped the brakes, allowing the markets to achieve some recovery especially in the second half of the weeks.
But could the price of Bitcoin continue to recover and surge back towards the $100,000 price level?
Bitcoin fear and greed sentiment bounced back up to 43 at the time of observation. A sizable recovery considering that it was as low as 4 just a few days prior.
As investors wait for a recovery towards greed, there are some interesting and noteworthy observations.
Whale demand makes a strong comeback
Whale activity made a strong comeback during the week. Large holder inflows surged as high as 44,170 BTC on Friday, which was the highest level of inflows observed since early February.
Bitcoin large holder outflows peaked at 9,920 BTC on Friday. This highlighted a widening gap between whale inflows and outflows, hence signaling more demand than sell pressure.
The return of strong whale demand signals that sentiment is increasingly shifting in favor of the bulls. Even institutional outflows cooled down considerably during the week.
Bitcoin ETFs registered $1 million worth of outflows observed during the week. This contributed to declining sell pressure, consequently paving the way for more upside.
The price of Bitcoin was over $84,000 at the time of observation. It was up over 12.5% from its weekly low at that price point.
This recovery could mark the start of more upside especially now that investor sentiment is shifting.
Retail demand could follow soon accompanied by institutional demand especially if the situation between China and the U.S cools off.
What Impact Could a Stagflation Environment Have on the Price of Bitcoin?
Although the market now appears to be in recovery mode, investors are on the lookout for the aftermath of the tariff wars.
Especially with the rising risk of a stagflation environment. Not so long ago, Bitcoin was described as an anti-inflationary coin but rising inflation in recent years led to bearish performance.
Does this mean a deflationary environment will have an opposite effect? The Federal Reserve will likely respond to the risks of deflation by lowering interest rates.
This could trigger more appetite for risk-on assets including Bitcoin. This is why Bitcoin analysts are keen on what the FED’s decision on interest rates because a favorable outcome would likely fuel more recovery.
A recent Grayscale analysis predicted that Bitcoin will likely could benefit from a faster pace of adoption in the medium term thanks to trade war-related tensions.
Grayscale noted that the trade wars could fuel the move towards reserve asset diversification away from the U.S dollar.
It highlighted Bitcoin scarcity as one of the major reason why Bitcoin would make an ideal preferable alternative.
There have been concerns that Bitcoin would find itself struggling to secure liquidity in a deflationary environment.
However, Grayscale argued that the scarce nature of the cryptocurrency may make it preferable to investors.
The analysis also noted that the price of Bitcoin had much more subdued downside compared to stocks.
The latter are traditionally not as appealing to investors in periods of deflation, and this means a lot of liquidity could potentially find itself into assets like gold and Bitcoin.
If that ends up being the case, then it is likely that the pace of BTC accumulation will accelerate in the coming weeks.
