- Bitcoin bubbles may aid its long-term adoption, as per an analyst.
- Maximalists remain optimistic about BTC despite short-term concerns.
Matt Huang, the co-founder of Paradigm ventures, believes that Bitcoin has been going through bubble phases that impact its overall health. According to him, bubbles are created when short-term traders start to buy BTC due to a surge in prices.
However, as demand for BTC during that period reaches its peak, the prices start to decline, and the bubble bursts, hurting the short-term investors.
Read BTC’s Price Prediction 2023-2024
Making the case for bubbles
Huang is of the opinion that these bubbles may end up aiding Bitcoin in the long term. This is because every time the market witnesses a bubble, the adoption of Bitcoin goes higher, and the cryptocurrency becomes more accepted.
The behavior of large addresses seems to indicate that we may be experiencing a Bitcoin bubble now. In the last few days, whales have dumped over 200 million worth of BTC, and the open interest in Bitcoin has increased.
This shows that high volatility is to be expected ahead for Bitcoin.
#Bitcoin whales dumped over $200m yesterday, while open interest has grown by 20k #BTC in the past few days.
I don’t see any meaningful spot accumulation besides stablecoins being converted into #Bitcoin.
I will take the under of @balajis bet. pic.twitter.com/N7G1q1bMpJ
— James V. Straten (@jimmyvs24) March 18, 2023
Another indicator that suggests Bitcoin may be in trouble in the short term would be the large number of addresses in profit. They have reached an 11-month high of 31,579,467.387.
These factors may affect Bitcoin’s price negatively. But, it should be noted that the king coin’s adoption also increased in the past year. According to data from Glassnode Bitcoin network’s generated fees went up over the past few days.
Source: glassnode
Too much optimism?
Despite all the negativity surrounding BTC, Balaji Srinivasan, the former CTO of Coinbase, remains optimistic about Bitcoin’s future. He went as far as to bet $1 million on Bitcoin hitting a million dollars over the next 90 days.
The ex-Coinbase exec believes that the U.S. will undergo hyperinflation soon, leading to a decline of faith in USD and an exponential rise in interest for BTC.
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I’m joining a Twitter space now to talk about the rationale.
In short, the Fed has chosen to monetize the debt in the messiest way possible: an orgy of money printing and bank runs. $150B has already hit the banks and more is on the way.
My bet is a way to ring the fire alarm… https://t.co/gZwWLIos8R pic.twitter.com/ARKsvBE469
— Balaji (@balajis) March 18, 2023
While Balaji’s extremely optimistic prediction about BTC may not come to fruition, it has shifted the sentiment of traders on the market. As a result, long positions taken in favor of BTC have increased over the last few days.
Source: coinglass
