As a seasoned researcher with a background in economics and finance who has closely followed the crypto market for years, I find the recent analysis by CryptoQuant’s Avocado Onchain particularly intriguing. The focus on short-term Bitcoin holders’ average buy price as a predictor of future market movements is an innovative approach that could provide valuable insights into the market sentiment.
As an analyst, I’ve been delving into CryptoQuant data recently, and it appears that the average purchase price for short-term Bitcoin holders could significantly influence Bitcoin’s near-future trends.
The attention is centered around individuals who’ve owned Bitcoin for several months, as data from the past suggests that the typical purchase price of these short-term holders can play a crucial role as either a strong foundation (support) or a barrier (resistance) in Bitcoin’s market trends. These short-term holders’ acquisition prices have been found to be closely connected to substantial changes in Bitcoin’s market direction.
How Short-Term Holders Buy Price Hints At Future Move
The analysis presented by a pseudonymous analyst known as ‘Avocado Onchain’ highlights past situations where Bitcoin’s price surpassed or failed to exceed the typical purchase price of short-term holders, catching the attention of observers.
The analyst suggests that keeping an eye on the average purchase price might provide valuable clues about possible future directions for Bitcoin’s trends.
Based on the data shown, it seems that the typical purchase price of Bitcoin owners who have kept their investments for a period of 1 to 3 months has frequently determined the overall trend in Bitcoin’s price movement.
If Bitcoin’s price surpasses its typical buying cost, it frequently triggers a strong upward movement, or bull run. On the other hand, when this average buying price serves as a barrier for buyers, it might indicate the start of a downward trend, or a bear market.
A case pointed out by Avocado was when Bitcoin hit $73,000 earlier in the year, but later experienced drops. According to this analyst’s assessment, at that point, Bitcoin didn’t manage to exceed the average purchase price of these short-term investors, causing a downward trend following that event.
The recurring pattern indicates that the typical purchase cost by short-term investors might be used as a dependable on-chain measure for gauging market opinions.
When Bitcoin’s price nears these thresholds, it often encounters significant checks on its progress, which may either validate or alter the current market direction.
Bitcoin Rally To $70k Approaching?
Bitcoin’s value appears to be steadily climbing since the announced US Fed interest rate reduction yesterday. Within just the last 24 hours, the asset has experienced a significant increase of approximately 5.8%, currently being traded at around $63,054.
Avocado noted:
Following the latest 0.5 percentage point reduction in interest rates by the U.S. Federal Reserve, Bitcoin is now making another effort to surpass the typical purchase price for 1-3 month holders.
Despite uncertainty about whether Bitcoin will surpass the current resistance set by short-term holders, sparking more bullish trends, analysts in the cryptocurrency sphere continue to express a positive perspective on this digital currency.
Based on insights from cryptocurrency expert Moustache, Bitcoin has experienced a significant technical event known as a “Golden Cross” where its short-term moving average (SMA100) has crossed above its long-term moving average (SMA200) on the weekly chart for the first time ever.
Beard indicated that combining this specific technical pattern with the recent reduction in U.S. interest rates could potentially lead to some extraordinary price fluctuations in the upcoming months.
#Bitcoin
-For the first time in $BTC‘s history, we see a golden cross of the SMA100/SMA200 (W).
and at the same time..
-Fed cuts interest rates for the first time in 4 years
Prepare yourself for some legendary months.
— 𝕄𝕠𝕦𝕤𝕥𝕒𝕔ⓗ𝕖 (@el_crypto_prof) September 19, 2024
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2024-09-20 08:47