Bitcoin (BTC) price fell below the $30,000 level on July 18, which means that retail investors may not have expected it due to the developments of the past month, but does today’s downtrend mark an upcoming trend shift?
The data suggests that it does not in the long term.
Getting to the positives first, bitcoin price is still trying to flip the $30k support level after about 10 attempts since April this year, but the price is constantly finding buyers in the $28,000 to $25,000 range, which buyers seem to be looking at as an accumulation area.
Cross-chain data from Glassnode’s Bitcoin accumulation trend points support this sentiment and could be positive, depending on how investors view things given that investor behavior at the 30,000 BTC price mirrors the same accumulation behavior seen in the $28,000-$24,000 area and near the assumed bottom of $16,800.
According to glassnode, “Accumulation trend score closer to 1 indicates that in aggregate, larger entities (or a large part of the network) are accumulating, and a value closer to zero indicates that they are distributing or not accumulating.”
Basically, buyers piled aggressively from November 2022 to December 2022 and piled heavy from March to April 2023 when BTC regained $30k, and the metric suggests they do the same in July as BTC either tries to overcome the $30,000 resistance or receives a boost from all the ETF and XRP SEC news.
Bitcoin in the crab market
Current price action data and the derivatives market suggest that Bitcoin is in a crab market, where the price remains range-bound and consolidating for an extended period of time. As JLabs analyst JJ the Janitor pointed out last week, a strong push through the $32,000 level should spur a closing of the Luna Terra-era CME gap.
From a Bitcoin weekly market structure perspective, the $30,000 level is an important pivot point that acted as support in the previous bull market cycle (and now as resistance) but a break above this level would essentially mark a higher top on the longer time frame and be confirmation of a trend reversal as the next resistance point is around the $37,000 level.
The activity of traders in the derivatives market is another factor contributing to the current crab market. Funding is down, open interest is relatively muted, and besides retail traders attempting long breakouts and retests of long lower support, or short breakouts and liquidation either way, the massive rally in these metrics should inspire confidence that the price is on the verge of some massive breakout yet to appear.
Sure, the DXY fell below 100 last week, but it likely has more to do with investors’ response to the Fed’s positive steps on inflation and a very narrow timeframe for expecting a massive reaction from BTC right away.
The price action in the cryptocurrency exchange futures contracts highlights the bearish buys and sells that are trying to outrun the price breakout and are not having much success in the short term.
JJ the Janitor suggests that the metric to watch is total open interest, if that breaks down sharply from the current range then real buying opportunities could emerge. Currently, it’s still in an uptrend, albeit to the side, but seeing an increase in OI could also be an interesting and potentially legislative or regulatory driven event.
Related: Bitcoin drops below $30k as macro and regulatory concerns take center stage
While Bitcoin’s short-term price action may cause some anxiety among new investors and day traders, the on-chain perspective remains quite compelling.
the # Bitcoin Long-term holder supply remains at 14.5 million BTC. This indicates that mature investors prefer to accumulate Bitcoin rather than distribute. pic.twitter.com/VkY9uTAVGG
– glassnode (glassnode) July 18, 2023
At the same time, the total balance metric in address accumulation also resumed its bullish trend since March 16, when BTC price traded at $25,000.
Readers should also note that the metric also shows that the total balance in accrual addresses has been increasing since January 2022, when bitcoin was trading at $47,800 per coin. What is clear is that through the worst of the crypto market crash and bitcoin price sell-off, multiple on-chain metrics show that investors continue to increase their allocation to bitcoin.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.