Bitcoin is coming back to life

Bitcoin is coming back to life

According to On a weekly basis, Bitcoin fluctuates between the upper bound at $65,000 and the lower bound at $29,000. A return to the lower end of the range would be interesting at the beginning, especially before re-entering or consolidating some of our positions.

The impatient continue to experience sales pressure. For more optimistic people, the ideal option would be liquidity below the last few wicks of June last year, or $28k. The small bounce that Bitcoin is giving us at the moment seems of little interest.

The price chart of the BTC. Source:
The price chart of the BTC. Source:

All these areas are interesting if, and only if, we see a reaction at these levels.

The middle of the range prevents the price from breaking through this resistance. Nevertheless, there has been an increase in volumes in recent weeks, which indicates a struggle between buyers and sellers.

Reduction of open interest

As we approach the lower limit of the range, the open interest of buyers decreases. It’s much more interesting now than it was 3 months ago.

Buyers no longer make stupid long trades as before, this highlights a certain fear of the market. This is the state we prefer to see in the case of the bottom. This is one of the reasons that falls are becoming less destructive. There are already few stops and buyers who sell their positions. But more on that below.

Fear index. Source: TradingView
Fear index. Source: TradingView

This fear of buyers is also reflected in the fear and greed index, which ranges between 20 and 30 points. However, if it rises, it quickly reaches 50 or more.

On a daily basis, we can observe the reintegration of the range. The price deviated in search of the MM200 before re-integrating and stumbling (for now) in the middle of this area.

Bitcoin Dominance

Now it is difficult to take a position on altcoins in the sense that a rollback in altcoins is possible. I would like to see a return to the resistance of about 50% dominance in order to resume positions that are considered more risky. Of course, you can be wrong in this analysis, but it’s hard to imagine that Bitcoin will not gain momentum to at least wait for 48%.

Indecisive SP500

The SP500 is also in an indecisive and somewhat critical situation.

SP500. Source: TradingView
SP500. Source: TradingView
  • Breakthrough of the market structure;
  • Increased liquidity;
  • Rebound to the 61.8 Fibonacci level;
  • The + OB support should hold.
  • An alarming macro

An increase in interest rates is usually frightening, but does not mean a systematic fall in the markets. However, the end of quantitative easing is bad news. Finally, it is now more attractive to take short-term bonds (3 years) than long-term (10 years). This rare phenomenon often leads to a recession.

As you can see, everything is very indecisive. Whether it’s SP500 or macro text. This is reflected in the range of the market, which moves one step forward and then two steps back.

The next few weeks and months won’t be as exciting as 2021, but that doesn’t mean we won’t be able to have fun.

Glassnode believes that “weak hands” have already capitulated

According to Glassnode’s weekly blockchain report, it looks like Bitcoin is setting the stage for the next bull run…

Glassnode examines the distribution of prices at which BTC last changed hands. The first chart shows that BTC was acquired fairly evenly during the months preceding January 22.

“On January 22, the price ranges in which BTC last changed hands were relatively evenly distributed between $35,000 and $63,000,” the report says. “This shows that there was relatively constant demand for BTC, both increased (August-November) and decreased (November-January).”

The following chart compares the January distribution (blue dotted line) with the current BTC distribution. GN draws several conclusions from this:

  • Most of the BTC supply has been newly accumulated between $38k and $45k, which is the price range in which we have been consolidating for several months.
  • Overall, today’s distribution is pretty similar to January’s. This suggests that HODLers (price insensitive) hold most of the BTC purchased for $40,000.

A study of realized losses and gains over the past three months shows that investors continue to view the range from $35,000 to $42,000 as an attractive area to accumulate.

It is interesting to find out at what price levels short-term holders bought their BTC, since they tend to sell most often when volatility increases.

The blue color below shows the BTC volumes belonging to long-term holders, red – short-term ones. We can draw the following conclusions:

There are very few STH left who have received their Bitcoins between $50,000 and $60,000, which suggests that they have already capitulated. Conversely, most BTC STH were received in the range of $38,000 to $50,000, which indicates that this price zone continues to arouse interest.

It sounds like a lot, but it’s actually a much more convenient configuration than in 2018 or 2020. At that time, only LTH held more than 35% of the BTC at a loss.

In addition, the number of BTC belonging to LTH is increasing, which are less price sensitive (black arrows). In other words, there are more and more holders who do not intend to sell, no matter what.

A brief summary of the key points raised by GN:

  • The vast majority of investors who hold a BTC bought for $40k are long-term holders, and have already experienced significant volatility, and will probably survive it again if necessary.
  • Most of the STH who bought a cryptocurrency more expensive than $ 50k have already capitulated and sold their BTC. Therefore, the potential selling pressure has also been exhausted.
  • Investors continue to view the $35,000 and $42,000 area as a buying opportunity. Accumulation trends remain very constructive in this area, although there is no momentum for an upward breakout yet.

Summing up

Over the past five months, we have seen a correction of more than 50%, which has significantly changed the structure of the price at which BTC was received. “Many LTH who bought shares above $50k remain unperturbed, while others were completely shocked.

It seems that most of the “weak hands” have already capitulated, and demand remains high in the range of $35,000 to $42,000. Everything is ready for the next bull run, which will soon be caused by hyperinflation, possibly due to the Russian embargo on oil and gas supplies…