As an experienced analyst, I have seen my fair share of market volatility in the cryptocurrency space, and the recent selling off of Bitcoin has piqued my interest. While it’s true that the world’s most valuable coin dropped over 5% on the last day of trading and continues to spiral lower, breaking below the psychological $60,000 mark, I believe this is an opportunity for investors to stack up.
Bitcoin experienced a significant decline in value over the past day, dropping by more than 5% and falling below the $60,000 mark. This downward trend continued even after reaching psychological round numbers that had been closely monitored due to previous gains, particularly over the weekend.
One analyst believes that as Bitcoin continues to decrease in value and sellers remain persistent, this could be an opportune moment for investors to accumulate more of the cryptocurrency. In a recent post on platform X, the analyst posits that Bitcoin is approaching the “Spring” period within the Wyckoff re-accumulation model.
As a technical analysis enthusiast, I’d like to introduce you to the Wyckoff Model, a valuable tool for traders and chartists alike. This model primarily relies on interpreting price and volume data to anticipate future price trends.
When discussing Wyckoff’s price patterns, the “Spring” phase is particularly noteworthy for traders. During this phase, prices may suddenly surge higher, leading to a significant breakout from the existing price range due to increasing trading volume.
Examining the Bitcoin daily price graph, it is clear that the cryptocurrency has been experiencing price consolidation. The significant support level can be found around the prices reached in May and June 2024. Previously, prices dropped below $57,000, hitting a low of approximately $56,500 in May. On the upper end, resistance can be found between $72,000 and the previous high in March 2024.
Bitcoin has recently dipped back down to test its major support level, with the price breaking through $60,000 and reaching a low of $56,900 earlier today. According to the Wyckoff model, we could be on the brink of the uptrend continuing – this is referred to as the “spring” phase. This trend is likely to persist if the recent price drop fails to gain confirmation.
Miner Capitulating Though Long-Term Holders Are Not Selling
While the analyst expresses optimism, not all share this perspective. According to Willy Woo, an on-chain analysis expert, the recent selling trend can largely be attributed to miner capitulation. The Bitcoin Hash Ribbons indicate that this downward trend may have just begun as the market is weeding out less profitable miners.
Following the Bitcoin halving in April 2020, the reward for mining new blocks was reduced by half to 3.125 BTC. This change put additional financial strain on miners as they faced the need to invest in up-to-date equipment and optimize their operations to remain profitable. With declining revenues, only those miners with the highest efficiency could continue to turn a profit.
In the past eight months, data from the blockchain indicates that miners have been selling off Bitcoin, which has reversed the upward trend predicted for Q1 2024 and intensified the market correction initiated in April. Consequently, those who lack the means to upgrade their equipment are finding it increasingly difficult to remain competitive and earn consistent block rewards.
During this period, institutions and large investors, referred to as long-term holders, ceased offloading their Bitcoin holdings around mid-January 2024. Subsequently, a significant milestone was reached when the US Securities and Exchange Commission (SEC) granted approval for the first Bitcoin exchange-traded fund (ETF).
I’ve recently noticed an intriguing trend in the Bitcoin market. Specifically, the illiquid supply – that is, the number of Bitcoins that have remained unmoved for more than two years – is approaching an all-time high. This indicates a significant portion of the cryptocurrency is being held by long-term investors, potentially signaling a bullish sentiment towards Bitcoin’s future value.
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2024-07-05 07:16