Bitcoin [BTC] investors should read this before making investment decisions
Bitcoin recorded a weak performance this week, with the crypto’s 7-day chart mostly painted in red. The aforementioned write-off set off several speculations in the market about what comes next. As always, the opinions of the crypto community differ.
While some believe that a trend reversal could happen in the coming days, several reports suggest otherwise. At the time of writing, Bitcoin was trading at $20,010, having fallen by over 5% in the last 7 days alone. It also had a market capitalization of over $384 billion.
Bears at play
Recently, Dan Lim, an analyst writing for CryptoQuant, pointed out in his analysis that the possibility of Bitcoin falling further is high due to several international reasons. In doing so, Lim highlighted quite a few bearish market conditions that could contribute to the same.
Percentage of 1W ~ 1M $BTC is 3.8%
“This indicator is the ratio of BTC that is 1 week to 1 month old after purchase, and is data that can be viewed as a basis for short-term purchases.”
of @DanCoinInvestorRead more👇 pic.twitter.com/P5MrquOciY
— CryptoQuant.com (@cryptoquant_com) 26 August 2022
According to the analyst,
“When a bear market starts, most people keep buying without realizing it’s a bear market. But if the bear market lasts long, most people get tired and stop buying.”
The prediction seems true, as several calculations supported the possibility of a further downtrend in the Bitcoinits price. For example, Bitcoin supply in profit hit a monthly low on August 28 after moving south since mid-August.
Source: Glassnode
Moreover, the MVRV ratio also fell, indicating a bearish market. This might just be a good opportunity for investors to buy.
Source: Glassnode
Recently, Bitcoin withdrawals from exchanges have also decreased significantly, indicating a similar bearish trend.
Easy OnChain, another CryptoQuant author, mentioned that this development indicated that the price levels have not yet been assessed for long-term accumulation. This could be a sign of a further drop in Bitcoin’s price in the coming weeks.
As the previous trend suggests, this could be a good opportunity for investors aiming for long-term returns.
Look forward to
A look at BTC’s 4-hour chart confirmed that the bears have the upper hand in the market, as the majority of candlesticks were red. Bollinger Bands suggested that BTC’s price was in a high volatility zone. These may soon lead to a price crisis, thereby minimizing the chances of a short-term recovery.
Source: BTC/USD, TradingView
Although the aforementioned calculations, analysis and charts projected bearish market conditions, a few indicators underlined a slight possibility of a trend reversal.
According to the MACD reading, the blue line was approaching the red line, which could lead to a bullish crossover in the coming days. In addition, Bitcoin‘s total number of addresses with non-zero balances depicted steady growth over the months. This despite the price development – A sign of investors’ confidence in the coin.
Source: Glassnode
