Monday, March 4, 2024

Bitcoin Fundamentals Face Reality Check: Indecision May Signal Price Downturn

As it hovers around $43,000, the price of bitcoin (BTC) does not appear to be biased in either direction in the near term. However, the on-chain measures provide a strong positive signal that might serve as the catalyst for the bull run.

There is no end to the consolidation of the price of bitcoin.

On January 11, the price of bitcoin hit $48,662, which is the 61.80% Fibonacci retracement level of the bear market that occurred between November 2021 and November 2022. After that, the price of bitcoin has been accumulating around this mark; on January 23, it dropped as low as $38,505.

There are two possible outcomes for the price movement of Bitcoin:

  • a continuation of the upward trend from the January 23 swing bottom at $38,505.
  • a significant downgrade of $34,000.
  • At $48,662, there was a local peak that resulted in a bull run reversal and the creation of new lows.

Even though perspective three is now extremely unlikely, many investors anticipate a correction that settles in the $35,000–$34,000 range and clears out late longs. However, there is a good possibility that the upswing will continue given the most recent plunge into the weekly imbalance below $40,000 and the bullish Swing Failure Pattern (SFP) it produced.

The price of Bitcoin may continue to move in an erratic manner if the uptrend is unable to get going at this point. This could take a few days or perhaps a few weeks, to develop.

When looking at the price of Bitcoin on a daily basis, however, things appear differently. According to this forecast, the daily imbalance will decrease from $41,396 to $40,278. This move would result in a sweep of Monday’s low, a rebalancing of the imbalance, and a dive into the low-volume node near $40,400.

Investors may choose to go long in Bitcoin or to remain neutral, depending on how the price of the cryptocurrency responds in the $40,000 range. It would be a moderate buy signal if there is significant purchasing pressure pushing the pioneer cryptocurrency to make a higher high above $44,000. Investors should anticipate a retest of the $50,000 psychological level if the buying pressure is successful in turning the $47,000 barrier into a support floor.

BTC on-chain measures reveal strong fundamentals.

Santiment’s research indicates that there is an intriguing change between holders of 100–1,000 and 1,000–10,000 Bitcoin. Investors looking at the latest events will see that the previous cohort has been dumping; between January 3 and February 2, their holdings decreased by 3.81%, from $393 million to $378 million. The latter group, meanwhile, has seen a 2.34% growth in its stack, going from 4.69 million to 4.80 million.

In about a month, the cohort holding 100–1,000 BTC has lost 100,000 BTC, whereas the cohort holding 1,000–10,000 BTC has gained 110,000 BTC at the same time. Even though this event is negative going forward, investors should look beyond it. Examining the late 2019–2020–2021 bull runs in greater detail reveals that the whales holding between 1,000 and 10,000 BTC were the ones who had accumulated before the price spike and were able to lock in profits at the peak. The whales holding between 100 and 1,000 bitcoins were probably buying as the price rose.

These findings all point to the 1,000–10,000 BTC range as a wise investment. Since March 2023, these whales have been building up their holdings, which have increased dramatically from 4.53 million to 4.80 million Bitcoin.

The 365-day market value to realized value (MVRV) of the price of bitcoin provides additional information to the indicator mentioned above. The average gain or loss for investors who bought Bitcoin during the previous year is calculated using this statistic.

In just two months, the 365-day MVRV has decreased by half, from 48% in December 2023 to 25% at present. This indicates that some investors have realized profits, which may be the cause of the sell-off. The average unrealized profit of investors who bought Bitcoin over the previous year decreased from 48% to 25%.

As previously mentioned, this development is congruent with the cohort’s decrease in holdings of 10 to 100 BTC.

Despite significant unrealized profits, the 365-day MVRV switched over to the zero line in March 2023 and hasn’t fully reset to zero since. The price of bitcoin may certainly finish its corrections if this pattern persists.

The quantity of Bitcoin stored on exchanges is another important indicator that sheds light on the mindset of investors. If the amount of Bitcoin kept on centralized platforms rises, it indicates that owners are less optimistic about the direction of the price and plan to sell in the event of unfavorable news.

The amount of Bitcoin that is now available on exchanges is 1.06 million, down from a peak of 2.92 million in March 2020. Investors should take note of the fact that this level was last observed in February 2018, when there were only about 17 million BTC in circulation as opposed to the current 19.73 million BTC in circulation, in order to gauge how bullish the market is.

In summary, all of the on-chain measures are displaying positive indicators. However, the short-term price of Bitcoin is still uncertain. Long-term investors should brace themselves to purchase the dips at the current prices, but they also need to be ready for corrections that could push prices down to levels between $30,000 and $34,000.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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