Tesla got the market excited briefly, but bitcoin is still in consolidation mode.
“The market is not as confident anymore,” say Arcane Research. “More traders are positioned short.”
As of March 21, there were fewer than 2.44 million BTC available on exchanges, the lowest amount since August 2018.
Price charts also are sending signals the oldest cryptocurrency might be losing steam.
Bitcoin's price has doubled this year, partly because of demand from institutional investors who are looking for an asset that might hold its worth if the dollar’s purchasing power declines.
Prices settled in the mid-$50,000 range for the most of Tuesday.
Bitcoin on Monday suffered its biggest single-day price decline in more than two weeks, after the fizzing of a retail trader-driven rally over the weekend.
And yet, bitcoin’s trading volume shows no signs of returning to previous high levels.
Bitcoin is within range of a quick run to the all-time high of $58,332.
Blockchain data might give traders comfort that prices aren't likely to revisit the end-of-2020 level anytime soon.
Analysts who track price-chart patterns said bitcoin’s climb to about $54,000 could position the largest cryptocurrency for a fresh ascent toward last month’s record price above $58,000.
Bitcoin's price climbed for a fourth straight day, even as 10-year bond yields continued their march toward 1.6%.
Investors are speculating how a faster-than-expected economic rebound might benefit bitcoin.
Bitcoin’s increasing reliance on purchase announcements for short rallies may not be an entirely healthy trend.
“Cash is king in times of distress, not bitcoin,” said one market watcher.