- Bitcoin finds support after profit-taking-induced sell-off.
- “Hodlers” continue to accumulate Bitcoins at a rapid pace, gaining 262,000 Bitcoins in the last 30 days.
- Bitcoin’s current price stabilization above the critical support level of 58,500 – a new leg up?
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Bitcoin prices have stabilized at a key support area above the $58,500 level following a sharp sell-off. Following a rally that took the world’s largest cryptocurrency to within a touch of the psychological $65,000 level, the sharp sell-off surprised many.
A massive transfer of around $1.88 billion worth of bitcoins on Monday caused further uncertainty as prices began to fall. A transfer of this magnitude generally unsettles markets as it is seen as a massive increase in supply that could be put up for sale and thus have a downward impact on bitcoin prices.
Data from Arkham Intelligence provided some clarity, showing that both the Bitcoin address that sent the initial amount and the address that received 30,000 BTC belong to Binance. This suggests that it was some sort of internal transfer, and that should have allayed market participants’ concerns.
Interesting data from AMBCrypto suggests that many market participants have been cashing in on short-term Bitcoin rallies. This could explain the sharp sell-offs Bitcoin has experienced while approaching key resistance levels.
The data used by AMBCrypto is the Bitcoin Futures Open Interest chart, which showed that the number of late closed positions increased as the price hit key resistance levels, indicating potential profit-taking.
Source: Coinglass (click to enlarge)
AMBCrypto also noted that there appears to be an increase in USDT outflows from exchanges shortly after significant price increases in Bitcoin, suggesting that market participants may be cashing out their profits from shorter-term positions.
Nevertheless, long-term Bitcoin holders have been increasing their holdings recently, a sign that many of them are taking advantage of the price drops.
Long-term “hodlers” increase their accumulation
Recent CryptoQuant data shows that long-term Bitcoin holders continue to buy up Bitcoin at an impressive pace. Over the past 30 days, long-term Bitcoin investors have added a whopping 262,000 BTC to their stash.
This increase has pushed their total holdings to an impressive 14.82 million Bitcoins, which now represents 75% of all available Bitcoins. This increase in accumulation underscores their confidence in the future of the cryptocurrency.
Source: CryptoQuant (click to enlarge)
Technical Analysis BTC/USD
Bitcoin is at a key support level of around 58,500, which it has already reached before. Today’s close is important as it could signal a recovery with a strong uptrend or a drop below this key level, potentially leading to further declines.
A bearish sign is when the 100-day moving average has crossed below the 200-day moving average, which usually indicates downward momentum. However, since this indicator reacts to past data, it is not always a reliable predictor.
The overall trend still looks positive, but if Bitcoin closes below 58,500, it could signal a change. If prices rise, they could face challenges at the psychological 60,000 mark and then around 61,750.
On the other hand, if Bitcoin falls below 58,500, it could test lower levels like 56,561 and possibly 55,000.
Support
Resistance
Bitcoin (BTC/USD) daily chart, August 29, 2024
Source: TradingView.com (click to enlarge)
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He has spent the last three years as an analyst honing his skills in various areas of finance including technical analysis, economic data interpretation, price action strategies, and analyzing geopolitical impact on global markets. Zain is currently working on his Capital Markets & Security Analyst (CMSA) certification with the Corporate Finance Institute (CFI), where he has completed modules in Fixed Income Fundamentals, Portfolio Management Fundamentals, Equity Market Fundamentals, Introduction to Capital Markets, and Derivatives Fundamentals.
He is also a regular guest on radio and television shows in South Africa, providing insights into global markets and the economy. He has also helped develop a financial markets course recognised by BankSeta (Banking Sector Education and Training Authority) at NQF Level 6 in South Africa.
