The co-founders of renowned analytics company Glassnode have issued a warning to Bitcoin traders, claiming that the present macroeconomic background might spark another sell-off.
According to Jan Happel and Yann Allemann of Glassnode’s newest newsletter, Bitcoin’s connection to risk-on assets remains high, implying that a correction in the US stock market will certainly drive down BTC as well.
“Our analysis continues to suggest that this renewed sensitivity to market risks and a higher likelihood of stronger drawdowns has not been due to a lack of confidence in [BTC] but rather due to a charged macroeconomic environment.”
The macroeconomic picture appears uncertain, according to the Glassnode co-founders, after the Federal Reserve announced a $95 billion per month taper of its balance sheet in a bid to curb ongoing inflation. They also raise the possibility that Russia’s military aggression will spread and attack European Union territories.
Glassnode officials claim that over $100 million streamed out of the crypto markets last week as a result of the dangerous atmosphere, with BTC bearing the brunt of the outflows.
“Zooming into the crypto space, last week saw $134 million in fund outflows, marking the second-highest weekly outflows in 2022. Solana received $3.7 million in inflows, and altcoins (multi-asset) recorded $5 million in inflows, while a massive $131 million flowed out of Bitcoin.”
Despite the gloomy macroeconomic outlook, Allemann believes BTC is still showing signs of on-chain strength. BTC investors are pulling Bitcoin from crypto exchanges at a historic rate, according to Allemann, signaling that a bottom may be in reach.
The shift in the net position of bitcoin exchanges indicates a possible bottoming and subsequent leg up. Because there is less supply on the markets, selling pressure is reduced.
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