Bitcoin Faces Near-Term Weakness with Medium-Term Strength In a recent analysis, Bitfinex highlighted the current state of Bitcoin, acknowledging its short-term vulnerability but emphasizing its favorable medium-term position. The analysis indicates that Bitcoin may experience further decline in Q1, but strong underlying factors position it for potential growth later this year. Supply Shortage and Miner Sentiment Bitfinex attributes Bitcoin's medium-term strength to a combination of supply shortage and positive sentiment among miners. The Bitcoin liquidity inventory ratio, which measures the supply-demand balance, has significantly decreased, indicating a tightening supply. Additionally, miners' exchange inflows, previously seen as a major selling force, have been declining since April 2022. This suggests a reduced selling pressure from miners, long-term holders, and other market participants. Impact of Adjustments Easing Bitfinex also notes the easing impact of recent market adjustments on Bitcoin's supply dynamics. The reduction in BTC flowing into the market has alleviated the selling pressure, further contributing to Bitcoin's medium-term strength.

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