Since the Black Thursday Bitcoin price market collapse, more and more investors taking their BTC off of exchanges and HODLing
Bitcoin price over the past week has fallen from a 2020 high of over $ 12,400 to under $ 10,000. However, in each plunge, some of the weakest hands in the crypto market may have been shaken out. If that is the case and the bulls can hold the support, our last chance to buy the drop before a new high may have come upon us.
Could the most recent Bitcoin price crash be a shake-up before bull run?
Instead of trying to trade Bitcoin to make a profit with mixed results, longtime crypto investors only favor a solid hodl in the long term.
Since the Black Thursday market collapsed, more and more investors are doing just that, taking their BTC from exchanges and transferring them to cold storage or other means – called HODL.
There are various metrics paying attention to where the Bitcoin is stored, along with when and how much it was purchased. One such metric, the Spent Output Profit Ratio, measures overall market profit and loss and represents the profit ratio of coins moved on-chain, measured through the variation between the purchase price and sale price.
Essentially, this metric tracks if any Bitcoin’s moved are doing so at a loss or gain. The SOPR indicator on glassnode fell below the Bitcoin price itself for the first time since April. This could indicate that “weak hands” were shaken out at a “small” loss, according to data scientist Rafael Schultze-Kraft.
— Rafael Schultze-Kraft (@n3ocortex) September 7, 2020
While the sell-off certainly brings fear across the entire crypto space, price action could be a bullish retest of resistance turning into support. Holding the SOPR at the same level as the price action can confirm the trend change in favor of the bull market.
This shows that the most recent crash was nothing more than a shake. Other analysts agree and say the correction is healthy and is nothing more than recurring returns and portfolio rebalancing after such a significant recovery in 2020.
If Bitcoin can hold, fundamental indicators like SOPR and even technical analysis suggest a new long-term uptrend is forming.
BTCUSD monthly bullish market structure and levels to watch | Source: TradingView
The monthly Bitcoin price chart shows that the recent rocking is indeed a retest of the ongoing uptrend. Not only is the cryptocurrency retesting the horizontal resistance at $ 10,000 as support, but it is also working to confirm the bear market’s downtrend line as well as support.
A breakdown and close below $ 9,250 can cause a complete bearish reversal and a drop to the triangular bottom trend line. This also shows that a breakout above the triangular trend line is a false breakout, and things could turn out to be dangerous.
With statistics such as SOPR and dozens of highly optimistic technical and charting indicators, more signs suggest that the underdogs’ shaking rather than the smart sellers are capturing the top.
Bitcoin should bounce here if it’s in a real bull market
On its weekly time frame, Bitcoin is approaching a level of macro importance: the 20-week simple moving average.
According to crypto trader Ledger Status, Bitcoin cleanly bounced off that single moving average on at least four separate occasions. During the 2018 bear market and once last year, the level also acted as a resistance.
The trader suggested that if BTC doesn’t bounce soon, it may be fair to say that the cryptocurrency isn’t in a proper bull market:
Sorry for all my circles, but the point is the 20 week moving average is worth watching. Proper bull markets should respond to it. pic.twitter.com/upahNHYxpJ
— Farmer Status (@ledgerstatus) September 8, 2020
Fortunately for Bitcoin bulls, a number of analysts believe that the leading cryptocurrency is nearing a bottom. This bodes well for the asset’s macro outlook, especially considering the ongoing importance of the 20-week simple moving average.
According to crypto analyst IncomeSharks, this is a good sign that selling pressure has subsided and that the brunt of the drawdown has been completed. Adding to this, on-chain analyst Willy Woo recently commented that he thinks Bitcoin’s on-chain trends are signaling a potential bullish reversal:
“Local on-chain switching bullish (looking at the next few weeks out), not calling this has bottomed, even though it may have. Playing the big swings it’s not a bad time to buy back in.”
This comes after Woo predicted the ongoing correction. The investor said in a tweet published around two and a half weeks ago that Bitcoin would likely soon retest the high – $9,000s.
You can see the BTC price here.
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