Bitcoin recorded a sluggish performance this week, with the crypto’s 7-day chart mostly painted in red. The aforementioned depreciation ignited several speculations in the market regarding what is to come next. As always, the crypto-community’s opinions are diverse.
While some believe a trend reversal might 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 had a market cap of over $384 billion too.
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 may contribute to the same.
Percent of 1W ~ 1M $BTC is 3.8%
“This indicator is the ratio of BTC that are 1 week to 1 month old after purchase, and is data that can be viewed as a basis for short-term buying.”
by @DanCoinInvestorRead More👇https://t.co/mDk9DvjkxA pic.twitter.com/P5MrquOciY
— CryptoQuant.com (@cryptoquant_com) August 26, 2022
According to the analyst,
“When a bear market starts, most people continue to buy without realizing that it’s a bear market. But if the bear market lasts for a long time, most people get tired and stop buying.”
The prediction seems true, as several metrics supported the possibility of a further downtrend in Bitcoin’s price . For instance, Bitcoin supply in profit hit this month’s lowest level on 28 August after moving south since mid-August.
Source: Glassnode
Moreover, the MVRV Ratio also declined, suggesting a bearish market. This might just be a good opportunity for investors to buy.
Source: Glassnode
Lately, Bitcoin withdrawals from exchanges have also reduced considerably, indicating a similar bearish trend.
Easy OnChain, another CryptoQuant author, mentioned that this development suggested that the price levels are not yet considered for long-term accumulation. This may be a sign of a further plunge in Bitcoin’s price in the coming weeks.
As the previous trend suggests, this can be a good opportunity for investors who are aiming for long-term returns.
Looking forward
A look at BTC’s 4-hour chart confirmed that the bears have the upper hand in the market, as the majority of the candlesticks were red. The Bollinger Bands suggested that BTC’s price was in a high volatility zone. These might soon lead to a price crunch, thus minimizing the chances of an uptick in the short-term.
Source: BTC/USD, TradingView
Though the aforementioned metrics, 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 might lead to a bullish crossover in the coming days. Additionally, Bitcoin’s total number of addresses with non-zero balances pictured steady growth over the months. This, despite its price performance – A sign of investors’ trust in the coin.
Source: Glassnode
