For the last two months, the Bitcoin market has been consolidating, as evidenced by sideways price behaviour. However, on-chain researcher Will Clemente has identified several critical levels that may herald an uptick in the market.
Bitcoin’s momentum is largely determined by short-term holders.
Clemente covered Bitcoin on-chain activity as well as derivatives market activity in this week’s Blockware Solutions Intelligence newsletter.
On the on-chain side, little has changed from last week. Bitcoin volume changes have been concentrated around the $36,000 to $45,000 price range. Specifically, he noticed that almost 20% of Bitcoin’s money supply has moved inside the price range, indicating that spot market premiums have maintained.
On the derivatives front, the market has also lacked “exuberance.” A sign of this is that the spread between the spot price of Bitcoin and three-month futures contracts, dubbed quarterlies, has been narrowing.
The statistic, which functions as a “risk-free” yield indicator, indicates that the market will require a big catalyst – such as Apple or Amazon announcing a Bitcoin purchase – to re-boil.
However, the expert speculated that the market may have some possibility for recovery in the absence of external factors. On-chain supply dynamics indicate an increase in illiquid supply as a result of Bitcoin exchange balances declining.
As suggested by on-chain statistics, this is potentially bullish for the market. Clemente noted that the majority of exchange withdrawals have been made to long-term holders (LTH) wallets, which are less inclined to sell.
Regardless, the statistic that would definitively shift the market back into undeniably bullish territory would be a resumption of positive realised prices for short-term holders. The metric, which is currently around $46,000, was about $53k when Bitcoin began to decline.
Finally, in order to regain momentum, I continue to look at the short-term holder realised price (or cost basis) as the level that BTC must retake in order to regain momentum, Clemente explained.
Bitcoin’s price has been gradually increasing in recent months.
While evidence indicates a subdued Bitcoin market, the low tide may have already turned. Bitcoin is currently selling at roughly $41,600, up 2.44 percent in the last 24 hours.
On the day, the price reached an intraday high of $42,200, its highest level in more than two weeks. According to estimates, the Bitcoin market is certain to reach new highs as acceptance continues to grow.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.