The recent drop in the price of Bitcoin below the $60,000 threshold, followed by a subsequent decline Drop to less than $50kSigns of a reversal may finally be emerging, as the latest buying trends suggest. These trends point to a strong accumulation phase among large-scale investors, known as whales, who have taken advantage of the price decline to bolster their crypto holdings.
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As such, Bitcoin addresses collectively withdrew over $1.7 billion worth of Bitcoin from various exchanges, marking the largest weekly inflow in over a year.
Accumulation trend among Bitcoin holders
According to on-chain data from IntoTheBlock, Bitcoin addresses have been steadily accumulating over the past week. This data is highlighted by the analytics platform’s net flow data, which is crucial in predicting an upcoming uptrend or downtrend in cryptocurrency prices. The data highlights a major shift, showing that outflows from exchanges have significantly outpaced inflows, with $1.7 billion more BTC withdrawn from exchanges than deposited.
Bitcoin (BTC) saw net outflows of $1.7 billion from exchanges last week, the largest amount in more than a year.
This indicates a build-up of large whales during the recent recession. pic.twitter.com/m4INbZmKmB
— IntoTheBlock (@intotheblock) August 9, 2024
Such an outflow is typically interpreted as a sign that investors are choosing to hold their Bitcoin for the long term, which in turn reduces the amount of Bitcoin available for sale on exchanges.
What does this mean for the price?
Recent dynamics in the broader investment world and increased volatility saw Bitcoin fall below $50,000 again last week. Interestingly, this sharp price drop marked the first time Bitcoin had traded below $50,000 in six months. However, the price drop gave many cryptocurrency believers an opportunity to accumulate more Bitcoin at its six-month low. This created buying pressure among some traders, which in turn helped support the Bitcoin price and helped prevent further declines.
A decrease in the number of bitcoins available on exchanges could have significant effects on the market. With fewer coins available for sale, buying pressure could increase, Which may lead to higher prices. With demand remaining steady or increasing. At the time of writing, Bitcoin is trading at $60,989, having established support at $60,000.
Given the prevailing bullish sentiment, this buying pressure could be the impetus that pushes Bitcoin price to the challenging $70,000 price level. However, the journey to $70,000 offers Four different resistance levels At $63,730, $65,510, $67,350, and $69,150.
The buying pressure is still ongoing according to the total flows to and from the exchanges. The total flow data shows a negative of 61.9% and 12.27% in the past 24 hours and past 7-day time frames respectively.
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However, Bitcoin is not out of the woods yet, as the on-chain market depth shows that there are still more sellers than buyers. At the time of writing, sellers have placed sell orders worth 31,458 BTC at an average price of $61,267 on various cryptocurrency exchanges. Meanwhile, buyers have placed buy orders worth just 27,734 BTC at an average price of $61,263.
Featured image by Pexels, chart by TradingView
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