Bitfinex Identifies a ‘2020 Pattern’ Preceding Bitcoin Surge

A significant reduction in the inactive supply of the leading cryptocurrency, which has been changing for over a year, suggests asset withdrawal from exchanges or sales by long-term holders, according to a report by Bitfinex.

Current actions by bitcoin investors mirror the pattern observed in December 2020 before a sharp rise in the crypto market, analysts noted.

“This model suggests we may be entering a similar growth phase,” the experts added.

According to analysts, after recent major liquidations linked to bitcoin’s decline, funding rates have begun to recover. Traders’ attention has shifted to the halving.

The report indicates that the halving of the block reward will become a fundamental factor in price dynamics, which has also led to a significant volume of bitcoin being withdrawn from centralized exchanges. The figure has dropped to the 2021 minimum — around 1.75 million BTC.

In a conversation with The Block, Swarm Markets co-founder Timo Lehes added that caution is necessary now, as the reduction in miners’ rewards could have an ambiguous impact on the market.

“There remains potential for price volatility, especially considering geopolitical instability, which unexpectedly led to short-term price declines,” he clarified.

At the time of writing, digital gold is trading at $62,400, having fallen 2.9% over the past day.

Previously, MN Trading founder Michaël van de Poppe suggested that the first cryptocurrency’s quotes have begun moving towards a peak above $73,000.

Former BitMEX CEO Arthur Hayes predicted a potential bitcoin drop ahead of the halving. The reduction in block rewards is a price catalyst in the medium term, and during the specified period, the coin will face liquidity outflow, the expert believes.