Recent activity on the Bitcoin network suggests that the asset may have bottomed out after the significant losses it has suffered recently. However, concerns about a new Covid variant and a supply barrier in the range of 60,000 to 62,000 US dollars are keeping Bitcoin on its way.

The traditional market struggled

US stock futures fell in early trading this morning as investors prepared for a dizzying day of trading amid fears of a new variant of Covid in South Africa.

The futures on the Dow Jones Industrial Average fell 820 points, or nearly 2.3%, while those of the S&P 500 fell 1.62%. The Nasdaq 100 futures are also in negative territory.

The benchmark 10-year US Treasury bond yields fell to 1.5243%, a sharp reversal after rising above 1.65% earlier this week. Bond yields are inversely proportional to price.

Oil prices also fell, with US crude falling 5.54% to $ 74.05 a barrel while the South African rand fell 2% against the greenback to 16.2778.

Asian markets took a beating today, with Japan’s Nikkei 225 and Hong Kong’s Hang Seng each falling more than 2%.

Bitcoin lost $ 55,000

Bitcoin is leading the latest correction in the market, with the price dropping $ 59,367 to an intraday low of $ 54,911 at press time.

Source: TradingView

Bitcoin’s price recently built a support base in the mid-$ 50,000 range. Long-term and structural trends remain bullish despite the recent decline. BTC has made higher highs and lows since the mid-cycle pullback low in July.

In the event of further selling pressure, it will be important to look for major technical support of the uptrend at around $ 53.2,000. This is the critical level the bulls will have to defend alongside confluence support of $ 53,000 to $ 52,700.

Overall, the decline did not result in a positive allocation from Long Term Holders (LTHs) and miners. This suggests that the pullback is more of a short-term shock than the start of a bear market. It was fueled by ongoing liquidations and panic sales of younger coins.

Despite the volatility, miners are accumulating again, with their reserves growing in over a week. Overall, older pools continue to hold BTC with no evidence of severe distributional bias.

Source: TradingView

In addition, the behavior analysis platform Santiment has seen a significant increase in whale populations over the past week. While Bitcoin failed to break the USD 60,000 resistance level, large investors have amassed tokens.

The data shows that addresses holding 100-10,000 BTC have added around 59,000 BTC, valued at nearly $ 3.5 billion, to their positions.

Source: Santiment

The increased buying pressure last week coincided with a sharp drop in the total amount of coins held on the exchanges. Since November 18, around 16,000 BTC has been withdrawn from trading platforms, which is the first time in more than three years that balances on exchanges have fallen below 2.43 million BTC.

Source: Glassnode

The decreasing supply of Bitcoin on exchange wallets combined with increased buying pressure paints a positive picture for the future price growth of the asset. When the amount of BTC for sale decreases, this limits the possibility of a price drop and creates optimal conditions for a supply shock.

Analyst Will Clemente claims that such network momentum has led to the development of “a clear bullish divergence between BTC supply moving into strong hands and price”.

To date, the groups have been split 12-18 months and 6-12 months, resulting in an increase in the SOPR and CDD of LTH.

This may not be a problem as some older buckets often ship on a regular basis. We have to follow them to keep track of them to deliver more. It is more worrying when these pools show a consistently positive distribution, especially if BTC continues to fall and close below $ 53,000.

Bitcoin has to overcome a significant supply barrier in order to continue its upward trend. IntoTheBlock’s IOMAP modeling shows that over 1.18 million addresses previously purchased over 555,000 BTC between $ 60,330 and $ 62,090.

A key close above this resistance area could help Bitcoin rebound towards $ 70,000.

Source: IntoTheBlock

Given that all of the older pools and miners are not actively distributed at the moment, and currency reserves remain at multi-year lows, the overall trend remains bullish.

Bullish on-chain data continues to make the recent decline an attractive buying opportunity between $ 58.3,000 and $ 53,000. As long as the old coins and miners do not start a positive distribution trend when prices fall, the bull market can be expected to continue.

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Annie

Bitcoin magazine

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