People misunderstand Bitcoin’s corrective steps

After Bitcoin held above $ 32,500 in a steady sideways trend for most of July, Bitcoin unexpectedly fell below this support on July 14th. The rapid decline towards the important $ 30,000 level has alarmed the bulls and bears as the larger market transitions from weakness to strength.

Another alarming metric is the decline in Bitcoin mentions on crypto social media, with the 7-day moving average falling to a half-year low. Amid these worries, a faint light that shimmers in the dark is the return of whales and miners. James Bennett, CEO of ByteTree, recently emphasize Predictions about the future of BTC.

Bitcoin price stabilized above $ 33,000 earlier this week as miners reduced sales and increased accumulation. Bennett painted a different picture, however, warning of a multitude of indicators pointing to a decline in activity on the network. He hinted that Bitcoin is still stuck in the neutral zone and that the main players are no longer as enthusiastic as they used to be.

The analyst also pointed out that the weekly number of Bitcoin transactions has declined sharply since April, with the current market downturn and trading slump continuing to result in a lower total value traded on the Bitcoin network. At the time of writing, the total value traded (accumulated in 1 week) was $ 23.9 billion, the lowest since December 2020.

Total accumulated Bitcoin transaction value in 1 week (purple) and BTC price (green) | Source: Byte tree

The analyst further emphasized that with the decline in on-chain activity, it is unlikely that Bitcoin will migrate north anytime soon. I said:

“It is unlikely that the price of Bitcoin will rise and even fall.”

The market immobility is also reflected in the trading volume with supply on the exchanges, which indicates a low level of BTC activity, especially on the spot market. On July 14, the supply on the stock exchanges was 2.52 million – the lowest since January of this year.

Trading volume (purple) and floor offer (red) | Source: Mood

In addition, the Bitcoin price hit an all-time low of 195% on July 11th. However, the same increase has brought the index to 215% at press time. The big drop on July 11 from the May 23 high was 593%. Bennett said:

“In the second half of last year, from July to December, the rate rose, and then the price rose as well. As the pace slows down in the course of the year, the prices follow. “

Bitcoin market speed | Source: Byte tree

The analyst also points to another “never-before-seen” trend for Bitcoin. According to the 7-day moving average chart of high quality traffic, the indicator in the high value pool fell below the 150,000 bitcoin line.

Here it is worth noting that every time the indicator falls below this range, the price of Bitcoin shows a weakening, like in late 2018 and 2019. In addition, high-quality traffic is also a driving force.

High quality river | Source: ByteTree

People misunderstand Bitcoin’s corrective steps

Accumulation in the Bitcoin market is a frequently discussed topic in the crypto community. As the previous accumulation pattern widened, BTC has moved from weak hands to strong hands. In other words, short-term participants exchange their new coins for long-term holders.

This, coupled with the return of miners and the on-chain index showing 29% of hash power back in action, marks an interesting development in this area. Additionally, the recent change in investor behavior is also reflected in other indicators, such as the decline in Bitcoin vibrancy to its late April level. Aliveness is the ratio of days of coin destruction (CDD) to total accumulation. accumulated all days on which the coin was accumulated on the network.

Liveliness bitcoin | Source: Glass knot

The metric in question provides a macro view of all on-chain activity and usage in relation to the life of the network. By taking into account Coin Days Destroyed (CDD), global CDD, and usage, it offers interesting insights into the larger market. A decline in bitcoin activity on the 7-day moving average chart indicates more inactivity in the market and a bullish accumulation or HODLing pattern.

Through a theme On Twitter, Ecoinometrics also recently spotted this trend and its correlation with the Bitcoin halving and greater whale sentiment. According to their data, Bitcoin “reset” investor behavior around the $ 30,000 mark and should now trigger an upward trend in the charts.

Currently, on the 428th day after Bitcoin’s third halving, the leading cryptocurrency is still hovering around $ 32,000. In addition, a look at the on-chain data shows:

“Bitcoin is recovering from a major correction that took the price from $ 64,000 to $ 30,000. The only way up for BTC / USD is if hodlers keep piling up. “

Ecoinometrics also took a look at who has bought these coins since the last Bull Run started in October 2020 and says there is a big change from last year. Initially, smaller investors, also known as the “little fish,” accumulated as Bitcoin surpassed its all-time high of $ 20,000 and climbed to a new high of $ 64,500.

In contrast, larger investors started selling at $ 20,000, even though the amount was insufficient to end the bull cycle. On the flip side, the elephants added selling pressure when Bitcoin hit $ 30,000 for the first time. This led to the tipping point after the May highs.

Hodling trend | Source: Ecoinometry

“Clearly $ 30,000 was the critical level preventing whales from amassing coins. If you look at the price movement during this period, you can see that BTC is growing so fast that the growth path begins to catch up with the logarithmic average. “

The reason for the unprecedented selling pressure could be related to whale sentiment and the fact that Bitcoin rose “too much, too soon”. This is viewed as an unsustainable market in the context of many FUDs. The data suggests that the $ 30,000 level is almost back, and investors large and small are back in the game.

“If this interpretation is correct, with this adjustment we have a reset process. If the accumulation trend continues, Bitcoin can only go up in one direction. “

Put simply, most have misunderstood the corrective movement. You are a reset for Bitcoin.

On-chain index: snout, little fish and BTC / USD | Source: Ecoinometry

This counter-argument brings a breath of fresh air to the BTC market amid recent price drops, consolidation and pessimism. On the 7-day moving average chart, ASOL soared on July 12, showing the movement of old coins. Both ASOL and MSOL are holding above their late June levels, marking the dominance of older coins in the market.

ASOL (pink) and MSOL (green) indicators | Source: Glass knot

While predicting major price moves at this point would be overly optimistic, many in the community continue to hope for stable northbound moves after a minor correction. The indicators mentioned will not diminish these expectations.

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