The bitcoin (BTC) market looks to be shrugging off increased selling pressure from profit takers after prices surged this week.
- On Wednesday, bitcoin jumped over 7% to hit 15-month highs above $13,000 after payments giant PayPal (ticker: PYPL) announced support for cryptocurrencies.
- Cryptocurrency exchanges tracked by blockchain intelligence firm Chainalysis received a total of 106,519 BTC on Wednesday, the highest daily inflow since Oct. 2. A similar spike was observed on Sept. 4.
- That could be a concern for bulls, as flows to exchanges often precede sell-offs.
- "The pickup in exchange inflows indicates some investors rushed to liquidate their holdings (take profit) in the rising market," Philip Gradwell, chief economist at Chainalysis, told CoinDesk over WhatsApp.
- However, there's reason to believe that any higher levels of sales were absorbed Wednesday, as bitcoin's trade intensity (a measure of how many times an inflowing coin is traded) jumped to a two-month high of 5.8. That's more than double the 90-day average.
- Each of the 106,519 bitcoins sent to exchanges yesterday was traded on average 5.8 times, meaning the market had capacity to absorb the sales.
- "While people are taking advantage of high prices, they are being outweighed by buyers," Gradwell said.
- As such, the ongoing price rally looks to have legs. Bitcoin is currently trading around $13,020, having witnessed a pullback from $13,230 in the past 12 hours, according to CoinDesk's Bitcoin Price Index.
- So far today, about 30,000 BTC have been transferred to exchanges, Gradwell noted.
- Going forward, there's likely to be no shortage of buyers amid the optimism generated by PayPal's move into crypto services and increasing institutional participation.
- "2020 is fast becoming the year of crypto acceptance and we see 2021 as the year of mainstream adoption," Constantin Kogan, managing director at Wave Financial Group, told CoinDesk in an email.
- Bitcoin will maintain "a strong bullish trend and rise beyond $14,000 by the year's end," he said.