After weeks of trading around the $30,000 to $32,000 level, Bitcoin (BTC), the world’s largest cryptocurrency by trading volume, dropped to $29,500 earlier today. This came as a surprise to retail investors as they weren’t expecting the price drop, given how Bitcoin had been gaining momentum among big players in the traditional finance sector recently.
While many investors were worried whether this is the beginning of a trend to the downside, crypto analysts bought them relief.
After spending almost an entire year at the lower end of the $10,000 range largely due to the crypto winter of 2022 that saw collapses of Terra/Luna, FTX, Celsius, and BlockFi to name a few, BTC has attempted to flip the $30,000 mark 10 times since April. Despite this, buyers continuously found prices in the accumulation zone between $25,000 and $28,000.
Glassnode Says Investors Are Accumulating More Than Selling Bitcoin
According to crypto analytics firm Glassnode, investors at every price range seemed to have the same accumulation behavior. Glassnode has a Bitcoin Accumulation Trend Score program which determines whether BTC holders are selling or buying the asset during a market period.
The company assigns a score between 0 and 1, where a value closer to 0 indicates that a big part of the network is distributing assets and not accumulating. Whereas, a score value closer to 1 indicates that larger entities are accumulating BTC on a higher aggregate.
Glassnode’s Bitcoin Accumulation Trend Score found that investors who had purchased the asset at the supposed near-bottom level of $16,800, accumulation zone of $28,000 to $24,000, and the current resistance level of $30,000 all shared positive sentiments about the current price and expects it to rise further.
Analysts observed that buyers strongly accumulated BTC from November to December and continued to do so from March to April when Bitcoin recaptured the $30,000 mark this year. The point metrics now suggest that buyers are doing the same in July as BTC attempts to cement the $30,000 resistance, which was given a huge boost by the favorable court decision in the XRP vs SEC lawsuit.
When you consider Bitcoin’s weekly market structure, the $30,000 level is an important pivot point that was a support level in the previous bull cycle and is now the resistance. Market watchers say that if BTC can move past its current resistance, it would essentially be a setup for trend reversal that will see the cryptocurrency get to a higher high in a longer period with a point of resistance marked at around the $37,000 level.
The Current Market Dip Is Due To A Lack Of Investment, A Result Of The High Inflation
However, the current price action and the performance of the derivatives market suggest that Bitcoin is in a crab market, where the asset’s price will continue to remain range bound and consolidated for a prolonged period. As funding is down in the derivatives market due to inflation, trading activity is minimal, which is the main contributing factor to the current crab market. For this reason, analysts do not see a massive breakout in the market any time soon.
JLabs analyst JJ the Janitor has asked crypto investors to keep an eye on the aggregate open interest metric. He says that if open interest rates were to break down sharply from the current range, then there will be a huge “buy the dip” opportunity for Bitcoin. For the time being, OI markets are in an uptrend, which is positive news for those expecting higher Bitcoin prices.
Despite all this, Bitcoin’s long-term holder supply remains at an all-time high of 14.5 million BTC, suggesting that investors still prefer to accumulate rather than distribute their Bitcoin. Meanwhile, Glassnode’s Total Balance in Accumulation Address metric for Bitcoin has been continually rising since March 16, when BTC was trading at $25,000.
This indicates that investors continued to increase their Bitcoin holdings through thick and thin, even after going through multiple crypto market collapses and price sell-offs over the past 12 months.
At the time of writing, BTC is trading at $29,996, down just 0.1% from the last day’s price. The leading cryptocurrency had briefly crossed the $30,100 mark before coming down to the resistance level.
Also Read: G20 Leaves Crypto Firms With No Place To Hide From Regulations
