Bitcoin stocks rose as investors awaited US CPI data

More and more crypto investors are holding digital assets, especially Bitcoin, in the upcoming US Consumer Price Index (CPI) data release.

Market indicators point to a shift to stocks, driven by investor sentiment and the possible implications of CPI data on the crypto market.

The information on the chain shows renewed investor confidence in Bitcoin

Glassnode's latest report shows a clear trend among crypto investors as the market recovers from last week's selloff. Despite the uncertainty, many investors are adding to digital assets, especially Bitcoin. This behavior is evident in the chain's data, showing a significant shift towards accumulation, especially in large wallets, often associated with institutional investors.

After Bitcoin reached its peak in March, the market experienced an extended supply spread. However, this trend seems to be reversing, especially among large wallets. The Accumulation Trend Score (ATS) supports this observation, indicating a return to accumulation-dominant behavior with a potential value of 1.0 last month.

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Long-term holders (LTH) played an important role in the run-up to the ATH, and after a period of heavy losses, they are now returning to the holding option. This trend is evident as over 374,000 BTC have migrated to LTH status in the last three months.

“From this we can assume that investors' tendency to hold their coins is now a major force in terms of their spending pressure,” Glassnode analysts said.

The 7-day change in LTH supply provides further insight. Following the high spread during the March ATH, recent data shows a return to positive territory, with LTHs now preferring to stock rather than sell.

Despite the strong spread from April to July, Bitcoin's spot price remains above the active investor's spending base. This scenario exposes investors to positive market momentum in the short to medium term.

Expectations of cuts and regulatory tailwinds fuel optimism

BeinCrypto reports that the crypto market experienced a lot of turbulence last week, with liquidity reaching $1.06 billion in 24 hours. Experts attributed the decline to weak US economic data and geopolitical risks.

However, Bitcoin and other cryptocurrencies showed a remarkable recovery the next day. At the time of writing, Bitcoin is trading at $60,806, which represents an increase of 2.5% in the last 24 hours. In a broader context, the total crypto market capitalization stands at $2.23 trillion, an increase of 2.4% over the same period.

Analysts suggest that the Federal Reserve's expected rate cuts may continue the market's growth. QCP Capital's note emphasized the impact of inflation on Bitcoin, citing its importance as the focus shifts to potential price cuts.

Analysts at 10x Research also note that Bitcoin's trajectory has historically been closely tied to inflationary trends. However, recent CPI releases suggest that this pattern may not last forever.

“Awaiting inflation, we are seeing short coverage in both Bitcoin and Ethereum. […] However, this latest rally appears to be another bear market comeback, as fundamentals continue to weaken,” he said.

Despite the short-term volatility, analysts maintain a positive outlook for Bitcoin in the long term. In addition to the expected decline in prices, other indicators for bullishness include bitcoin exchange-traded funds (ETFs) and regulatory tailwinds.

“The 12-month outlook for Bitcoin is one of the most aggressive I've seen. With the move into Bitcoin ETPs, regulatory transparency and expected price declines, Bitcoin could emerge as a superior long-term hedge,” noted Juan Leone, senior investment strategist at Bitwise.

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In particular, inflows into Bitcoin ETFs have surpassed $17 billion since January, marking an all-time high for the asset earlier this year. With major financial institutions such as Morgan Stanley approving Bitcoin ETFs, the trend is expected to continue, further supporting the value of Bitcoin. Additionally, significant progress in crypto-friendly legislation in the US and growing political support suggest a favorable environment for greater adoption and value appreciation.