On-chain demand for Bitcoin price has been waning as of late, which could contribute to its subtle signs of technical weakness

By Selena On Jun 21, 2020

The demand for investment and trade of Bitcoin has been quite weak for days. In particular, the Bitcoin price is gradually decreasing as it continues to trade firmly in its long-term consolidation channel. Overnight, Bitcoin faced some upward volatility that made it drop to $ 9,100 before recovering to $ 9,380 at press time.

BTC/USD 4 hours chart | Source: Tradingview

Bitcoin price continues to fluctuate, but the technical outlook is bleak

At press time, Bitcoin is trading an increase of about 1% at the current price of $ 9,380. BTC has been trading around this level for the past few weeks, but it has been steadily lower for the past 12 hours. The buyer was able to defend against a drop to $ 9,000 overnight, but the inability to recover continuously over the period since seemed to indicate imminent disadvantages.

Bitcoin price currently offers buyers an excellent opportunity to make contact, and whether or not this catalyzes any upwards momentum should be telling as to how strong BTC’s bulls truly are.

$BTC LTF Update

Price slowly back down to around $9300 which was expected due to bulls not being able to flip $9500 on the previous retest and price showing distribution…

Good wicks previously below $9200 as buyers step in, let’s see how well we hold up this time. #bitcoin pic.twitter.com/fZuISTb115

— Cactus (@TheCryptoCactus) June 20, 2020

According to a recent report from Arcane Research, Bitcoin’s Network Demand Score has dropped in recent times, fueled by weakening MRI, velocity, short-term spending, short-term fees, and more.

The report stated:

“MRI, velocity, short-term spend, and short-term fees look weak. Notably, velocity has been trending down since mid- May, indicating a slowdown in transaction activity on the Bitcoin network. This favors more downside for Bitcoin.”

Source: Arcane Research

All of this has caused the Network Demand metric to plummet, often a sign of impending weakness.

Arcane research explained that this latest correction marks an inflection point of Google for the underlying power of cryptocurrencies, and it seems that further weakness is imminent in the coming days and weeks.

A crucial bull signal about to appear once again

According to the chief executive of Blockware Mining and a fund manager in the space, Matt D’Souza, drunk on the Bitcoin Halving event, about 30% of the network’s hash rate was at risk of capitulation.

Finance podcaster and Bitcoin bull Preston Pysh echoed this, explaining in response to D CUSTOMouza’s comment:

During the 2016 halving, the price went sideways for 9 days and then had a 28% drop, and it took 100 days to get back to the halving price. Mentally prepare yourself for the efficiency cleansing and difficulty adjustment as the protocol prepares all passengers for launch. pic.twitter.com/5dNcs0ZnJ1

— Preston Pysh (@PrestonPysh) May 12, 2020

With Bitcoin’s hash rate has dropped by about 40% as mentioned above, this investment has already occurred. But the hash rate crash has been followed by a surge, with BTC miners entering back into the industry with new strategies and machines to increase their profitability. This recovery has allowed Bitcoin’s Hash Ribbons – an indicator that derives signals from the movements of BTC’s hash rate – to begin trending towards a “buy.”

Hash Ribbons and Bitcoin price chart from analyst Charles Edwards | Source: TradingView.com

Charles Edwards, a digital asset manager, and analyst stated:

“Hash Rate “Recovery” looks like it may occur next weekend… The Hash Ribbon “Buy” signal also requires price momentum to improve from here, so it could take a bit longer than a week.”

Hash Ribbons Buy confirmed.

This is just the 10th time these conditions have been met for #Bitcoin.

It is highly likely we never see $BTC under $6000 ever again.

All other occasions saw an average gain-to-cycle-peak of +5000%.

Now is the period to Buy Bitcoin and never sell. pic.twitter.com/hSH9BtRhsj

— Charles Edwards (@caprioleio) December 28, 2019

This is important to Bitcoin’s bull case as previous “Buy” signals triggered by the Hash Ribbons have preceded parabolic rallies in the asset. Edwards pointed out in December last year that the average increase and the highest level of the index was over 5,000%, with the Hash Ribbons predicting the biggest moves of assets would increase.

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