Bitcoin traders need to watch out for this ticking time bomb

The range above $ 40,000 is an important psychological level for Bitcoin. As of early 2020, prices have traded at $ 40,000 or more for 155 days, or 36% of the time. Since all of these 155 days take place in 2021, the price will be above this range on 59% of the days this year. To dig deeper, we can use UTXO’s real-world price distribution data to get a glimpse of Monday’s bearish move, and a closing price of $ 43,460 corresponds to the whole process as follows: How.

Currently, supply is at or above the close of trading at 21.8%, indicating significant interest at higher levels. On the flip side, 19.4% of the supply is above $ 20,000 and below the closing price, with strong support built in the $ 31,000 to $ 43,000 range. About 25% of Bitcoin supply is over $ 40,000.

Real price distribution UTXO | Source: Glassnode

Each bar in the diagram below shows the number of existing Bitcoins that were last within a certain price range. If Bitcoin drops below $ 40,000, we will see a significant sell-off in the market as many short-term investors lose money, along with a larger structural shift towards long-term owners.

Bitcoin price: number of trading days in the range since 2020 | Source: Glassnode

Another way to indicate potential losses in the market is by the percentage of profitable Bitcoin supply. Over the past few weeks, the percentage of profitable supply has dropped 13%, with most of it happening this morning. Notice that last July, just before the 70% increase from $ 29,000, this metric dropped much lower (66%).

Percentage of profitable bitcoin supply | Source: Glassnode

If Bitcoin price continues to drop in the short term, it looks like there will be plenty of opportunities for long term holders in the buy market. This week, traders should keep an eye on derivatives market dynamics and macroeconomic conditions.

More and more lines come out

According to a recent report by Glassnode, there seems to be more demand for the coin accumulated from wallet balances. In fact, there was a massive negative exchange traded net outflow (BTC) last week, with BTC outflows at -92k BTC / month.

In particular, after March 2020, both the stock market balance and the net cash flow balance of the stock exchange show a significant change in the market pattern from a dominant mode of net inflow to a dominant mode.

Change in the net position on the stock exchange | The source: Glass knot

Compare the performance of exchanges

While the outflow in the market has remained constant, external factors have influenced the development of the stock exchange. Characteristic behavior was found in two exchange groups.

The first group of exchanges includes Bittrex, Bitfinex, Kraken, Gemini, and Binance. The second group includes Bitstamp, OKEx, Huobi, and Coinbase.

The first group shows typical inflows and balance growth for most of 2020 and 2021, reflecting the growing dominance of HODL coins.

Binance and Gemini are the top recipients of this group. After the sell-off in May, pool balances were relatively stable with modest outflows.

Bitcoin balance on Group 1 exchanges | Source: Glassnode

In contrast, the second group has recorded a continuous outflow since March 2020. In fact, this has really accelerated over the past few weeks.

In addition, the stock exchanges’ net balance continued to decline as the inflows in May were absorbed by the market and transferred to investor wallets.

Bitcoin balance on Group 2 exchanges | Source: Glassnode

Stock market balances serve as an important metric to measure traders sentiment towards the underlying asset. In the case of Coinbase, this suggests that the trader is intending to HODL rather than sell.

It is noteworthy that the number of Bitcoins in Coinbase Pro’s vaults has decreased by 28,843.87 BTC compared to the previous month.

On the other hand, Binance’s modest outflow is a sign that owners are skeptical of the price of BTC. Since Binance is also appealing to a wider global audience, it could play a role in this trend. The rising Bitcoin balance on Binance shows that contrary to the trend at Coinbase, users of the platform are thinking of selling BTC.

Looking back, Bitcoin balances on Binance rose from 199,700 BTC on April 20th to 347,590 BTC on June 26th – 1.5x more. During that time, the price has dropped from more than $ 65,000 to under $ 30,000.

So unless price bounces back soon and outflows on Binance don’t dominate again, the rising balance could be a worrying ticking time bomb.

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