Crypto CurrencyNews

Bitcoin analyst gives 4 reasons why BTC price will hit $22,000 next

Philip Swift, a Bitcoin (BTC) analyst and the creator of Lookintobitcoin.com, laid out four reasons why BTC is headed to $22,000. Both fundamental and technical factors indicate the top cryptocurrency’s momentum is strengthening.

The one-year HODL percentage, the decline of Bitcoin exchange reserves, neutral funding rates, and institutional accumulation point toward a prolonged BTC rally. Swift wrote:

“1yr HODL % still really high? Yep. Bitcoin being rushed off exchanges? Yep. Funding still neutral? Yep. Institutions still buying? Yep. Cool, See you at $22K in a few weeks when price reaches the 350dma x 2 of the Golden Ratio Multiplier.”

Since the start of the fourth quarter on Oct. 1, the price of Bitcoin rose from $10,773 to $16,730 on Binance. 

BTC/USD daily price chart since Oct. 1. Source: TradingView.com

HODL percentage shows investor confidence

The Bitcoin space refers to long-time BTC holders as “HODLers.” The One-Year HODL Wave shows the growth in the number of investors holding BTC for over a year.

Since the March crash, the One-Year HODL Wave rose from 59% to over 62%. It is now at an all-time high, signifying a clear accumulation trend.

The One-Year Bitcoin HODL Wave. Source: lookintobitcoin.com

When the number of HODLers increases, it demonstrates an appetite to purchase and hold Bitcoin for a long time. The ongoing trend might show that investors expect a broader Bitcoin rally in the longer term.

Funding rates are neutral

During bull cycles, the funding rates of Bitcoin can significantly spike as long holders or buyers overwhelm short-sellers.

The Bitcoin futures market uses the funding rate mechanism to ensure balance in the market. If there are more longs than shorts, the funding rate becomes positive. If so, buyers have to compensate short-sellers and vice versa.

The average funding rate of Bitcoin perpetual futures contracts is at around 0.01%. Throughout the past several months, the funding rate has remained at around 0.01% or sometimes below it.

This shows that there is a decent balance between buyers and sellers, and the market is not overheated as of yet.

Bitcoin reserves are dropping

As Cointelegraph reported yesterday, around 145,000 BTC has moved out of exchanges throughout the past month.