The sell-off in Bitcoin prices that began in January appears to have lost some steam, and is now approaching the levels that were seen before the sell-off began. There are still plenty of reasons to be bearish on Bitcoin, but the three indicators on our “Bitcoin Price Sell-Off” chart suggest that a reversal in the current downtrend may be in the cards.
Most people perceive a Bitcoin price sell-off as something to be feared. After all, Bitcoin has been one of the best performing assets for more than a year now, and the price keeps hurdling over $3,000 (as of this writing). Why would anybody want to see prices fall? And if they do, it doesn’t look like a crash, does it?
After a weekend of bad news on US-China relations, Bitcoin slid back into the red, where it has resided since mid-August. Bitcoin actually made a little bit of ground in the last 24 hours, but it is still down about 7% since Tuesday, when the Bitcoin price began a sell-off that’s now dragging the cryptocurrency’s total decline to about 40% over the past three weeks.. Read more about bitcoin price prediction and let us know what you think.Bitcoin (BTC) has entered a period of consolidation after falling on the 19th. May on Coinbase had plummeted from $42,600 to $30,000. The flagship crypto-currency quickly recovered its losses and returned to $40,000, but it failed to register a clear bullish breakout above that resistance level, and at the time of writing the price remains anchored below $40,000. Recent price action in the bitcoin market has been volatile at best, with traders showing no clear signs of direction in the short term. Some analysts have predicted that if the price of BTC/USD does not rise above $40,000, it could fall to $20,000 in the next few sessions. It is interesting to note that different parameters within the network tell a different story. One of the most interesting themes supporting the bullish sentiment in bitcoin is the observation of holders and hoarders piling up more BTC during the recent price drop. Moreover, a metric known as SOPR (Spent Output Profit Ratio), adjusted for bitcoin’s subjectivity, shows that the market as a whole is no longer selling bitcoin at a loss. SOPR adapted to the Bitcoin entity. Source: Glassnode Meanwhile, blockchain data shows that exchanges are seeing a decline in reserves, suggesting that traders are putting their digital assets into cold portfolios or investing in DeFi liquidity pools for more profitable returns. Although the short-term outlook is in favor of the bears, the following three blockchain indicators suggest that bitcoin could be about to hit bottom.
Bitcoin: Termination of Age Groups
The price correction of bitcoin has led to three types of reactions in the cash market. The first has to do with panic selling by short-term traders who sold bitcoin to minimize their losses, probably because they bought the cryptocurrency right at the peak. The second reaction has to do with the HODLERs who decided to keep the bitcoin offering that came out of it. They have shown long-term confidence in bitcoin’s uptrend amid favorable macroeconomic fundamentals, such as ultra-low interest rates, low government bond yields, inflation fears, and a declining U.S. dollar, making hedge assets like bitcoin attractive to HODL. The best way to create wealth with #Bitcoin is to be boring. 2 quick, straightforward and simple steps: 1. Buy 2. HODL It’s really that simple. – Paul McNeil #BTC100K ️ (@_CryptoCurator) May 28, 2021 The third reaction was a mix of HODLers and hoarders, as traders took advantage of bitcoin’s price drop to buy more cryptocurrencies at a discount. Several indicators within the chain showed a large contrast between bitcoin holdings by short-term and long-term holders during the price drop. For example, bitcoin: In the table of issued age groups below, more coins from one day to one week old were sold last week. These coins continued to move in and out of the market, reflecting the highly volatile state of market prices over the past week. Age groups of bitcoin withdrawals issued, calculated from the seven-day moving average. Source: Glassnode At the same time, parts that were not used for 1-3 months and 3-6 months have also changed addresses due to the recent price drop. traders who had bitcoins in their wallets for 1-6 months transferred them in May. Source: Glassnode Another Glassnode metric called bitcoin: The total supply of long-term holders showed that long-term holders – entities that have owned bitcoin for more than six months – benefited the most from tokens sold by short-term holders. The supply of bitcoin held by long-term holders continued to rise during the May collapse. Source: Glassnode In a weekly message to clients, Anthony Pompliano, an investor at Pomp Investments, said. Long-term holders are expanding their positions, short-term holders are selling, and some firms in the short-term holder cohort have reached the 155-day threshold for this measure and now belong to the long-term holder cohort. This divergence points to long-term stability in the bitcoin price, with the most serious holders taking a stand against the ongoing macroeconomic crisis.
Bitcoins balance on exchanges drops
Net bitcoin holdings on cryptocurrency exchanges have also fallen over the past seven days, showing that fewer traders are willing to sell their bitcoin holdings. The metric indicates the typical behavior of a trader. Traders only deposit bitcoins into their exchange wallets when they want to sell them for currency or exchange them for other digital assets. As a result, BTC reserves on trading platforms are increasing. bitcoin exchanges Bitcoin reserves have fallen by 14,207 BTC over the past 7 days. Source: Glassnode Conversely, the increase in BTC withdrawals reflects the decision of traders to stick with the cryptocurrency. This means that bitcoin is not under immediate selling pressure in the spot market, as the latest Glassnode values show.
Bitcoin accumulation addresses and balances increase
The total number of accumulation addresses and the balance of these portfolios are increasing. In retrospect, a cumulative address is one that has received at least two BTC transactions, but has never had an asset withdrawal. Convinced Bitcoin bulls remain committed to exceeding the price decline , source: Glassnode. Over the past seven days, the number of these accumulation addresses has increased, adding 7,430 new portfolios to the list. Another metric called bitcoin: The supply of subjects with balances ranging from 0.01 to 0.1 showed that new users joined the Bitcoin network during the price drop. Moreover, the supply of addresses holding between 0.001 BTC and 1 BTC has increased in parallel, demonstrating a steady increase in interest from traders. The supply of bitcoins in portfolios with 0.01-0.1 BTC increases when prices fall. Source: Glassnode The sell-off in the Bitcoin price has been so brutal that it’s now a full-on panic in some corners (let’s just say I wasn’t to keen on it myself). The latest Bitcoin price sell-off has been driven by a combination of factors, but the most important is probably the increasing amount of buyers that have been removed from the market.. Read more about bitcoin price history and let us know what you think.
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