Investors transfer tokens from exchange wallets to their personal wallets when they plan to hold them (or HODL), suggesting a probable reduction in sell pressure, the strategists stated

Bitcoin’s 2023 rally may continue if flows between crypto currency exchanges and personal digital wallets are any guide, as per strategists at Bank of America (BoA) Corp.

Bitcoin worth $368mln was sent to personal wallets in the week through April 4, which saw this year’s second largest net Bitcoin outflow from crypto exchanges, Alkesh Shah and Andrew Moss stated in a note.

Investors transfer tokens from exchange wallets to their personal wallets when they plan to hold them (or HODL), suggesting a probable reduction in sell pressure, the strategists stated. The acronym “HODL” is a crypto sector meme which refers to the notion of holding onto tokens for the long term.

Concerns arising out of the US regulatory clampdown on digital asset platforms may have sparked the outflow from exchanges, the strategists stated in a note.

Bitcoin’s YTD rise has surpassed top asset classes and triggered a debate on why the biggest token is bouncing back from a turmoil last year.

Some experts state that anticipations of ensuing Federal Reserve interest rate cuts are boosting riskier investments such as crypto. Other theories — often disputed — include the coin’s supposed capability to skip stress in the banking sector or its ability to hedge inflation as a type of digital gold.

Bitcoin this week climbed above $30k for the first time since June 2022. The token is over 80 per cent higher since December 31, beating the Nasdaq 100 tech index’s 19 per cent rise. Gold has jumped nearly 9 per cent.

Digital tokens have climbed this year in spite of aggressive actions by US regulators following the collapse of FTX and other crypto businesses. The rally has come amid a decline in crypto market liquidity and trading volumes after the bankruptcies.

I am looking for Bitcoin to move toward $33k before any relevant technical correction takes place, according to Nathan Batchelor, managing partner at analytics platform Biyond Trader. Bitcoin has ceased responding to bad news. This is a revealing sign of a strong buyers’ market.

Traders are waiting for more signal to verify Bitcoin’s breakout, as per Garry Krugljakow, founder of 0VIX, an open source protocol for lending and borrowing in blockchain-based decentralized finance, or DeFi.

Krugljakow further said that economic reading due this week could provide that indication, specifically Wednesday’s US CPI. The median estimate in a Bloomberg News survey calls for a 5.1 per cent rise in March from a year earlier.

Anything below 5.2 per cent or around 5.2 per cent could lead to a bullish continuation for Bitcoin, Krugljakow said. 5.3 per cent or more will most probably give a little shock and reduce the present price action.

Contrary to Bitcoin, Ether’s net inflow to crypto exchanges in the week through April 4 was the highest of 2023, as per BoA. That is prior to the Ethereum blockchain’s biggest software upgrade since Merge last year.

Known as Shanghai upgrade, it is the result of years long work that alters the way Ethereum works. While BoA experts don’t expect the event to directly affect selling pressure, they do anticipate increased volatility around the shift in part because of reduced liquidity, exchange inflows and derivatives activity.

Ether, the biggest token after Bitcoin, is nearly 55 per cent higher so far in 2023, nearly in line with a gauge of the top 100 digital assets. Ether dropped 1.7 per cent to $1,863 as of 11:20 a.m. in Tokyo on Wednesday, whereas Bitcoin declined less than 1 per cent to stay near $30k.