In the past few months, the world saw more historical events than during the entire year of 2021. Their impact on the world economy is huge, which has naturally affected investor sentiment. In the face of the macroeconomic crisis, the disruption of old and the creation of new supply chains, big businesses tried to protect their capital.
This resulted in the rising value of precious metals and the US dollar. However, as the Fed started its monetary policy tightening, the attractiveness of the greenback has slightly decreased. At the same time, we can observe the increasing flow of capital into the cryptocurrency market, namely in Bitcoin and stablecoins. On the one hand, this can be attributed to the fact that among the newest investment instruments, cryptocurrencies are relatively safe. Biden's executive order has also fueled investor interest in the crypto industry.
Yet, the Glassnode research shows that no significant shift towards cryptocurrencies has actually happened. For example, the number of BTC coins that have not been used for at least a year has reached a relative high of 62.9% of the total supply. This suggests that the main demand for cryptocurrency is formed by long-term investors rather than by newcomers.
But why does the number of unique addresses and transactions keep growing? We can assume that the pressure of sanctions affected both major players and retail investors, who rushed to move their capital to a safer place. In this regard, another important advantage of cryptocurrencies has come to light - the speed and security of transactions. The possibility to transfer funds to any part of the world with relatively low transaction costs has become a decisive factor for investors. Given Bitcoin's total decentralization and limited emission, investors have the opportunity to use the asset as a means of funds transfer as well as part of a diversified investment portfolio.
Notably, at the current stage, Biden's executive order is more important for investors than the policy of the Fed. The regulation of the cryptocurrency industry has made investors more willing to use Bitcoin for their own purposes. And as the regulatory framework grows, more and more institutional funds will use cryptocurrencies in various crisis situations. The terrible events of the last month are becoming the ground for the establishment of digital assets as multifunctional and profitable financial instruments.
Meanwhile, Bitcoin has finally hit the upper limit of the $37k-$43k narrow range. The asset managed to settle above $43k, but overall buying activity is still weak. The market lacks large volumes for the final breakout of the upper channel's boundary at $45.7k. When approaching this level, the green candlesticks are getting weaker, which indicates the gradual exhaustion of the bullish momentum. Therefore, Bitcoin will most likely consolidate in the $42.5k-$43k area or moves lower to the key support area of $40.5k.