As a seasoned crypto investor with a decade of experience navigating the volatile Bitcoin market, I can’t help but feel a sense of deja vu as I watch the current downturn unfold. The charts may have changed, but the story is all too familiar.
Bitcoin is facing challenges and finding it tough to recoup losses that occurred earlier this week. Despite prices showing some stability over the last day, the overall direction seems to be heading downwards at present. For the trend to reverse, there needs to be a strong breakthrough above the nearby resistance level of approximately $66,000.
Bitcoin Active Addresses “Anemic”
The data indicates a concerning decrease in on-chain transactions as prices stabilize and exhibit a bear market pattern. Speaking with analyst X, we find that the number of active Bitcoin wallets has been declining for several months. However, this metric saw an increase from late 2023 up until early 2024.
As this growth period continues, Bitcoin prices have surged significantly, rising from approximately $30,000 to a peak of around $73,800. However, when considering the progress in on-chain advancements, we’ve noticed a downward trend in the number of active addresses.
In simpler terms, when network activity slows down like it is now, it could significantly impact price trends. For example, as we’ve seen in the past, an increase in Bitcoin’s price often coincides with a rise in active addresses. Currently, prices are facing resistance and the number of unique transactions is decreasing, suggesting less enthusiasm among the public.
Spot Bitcoin ETFs To Blame?
The analyst has picked out a possible explanation for this contraction. Looking at the Bitcoin active addresses trend, it is easy to note that activity fell in momentum when the United States Securities and Exchange Commission (SEC) approved the first batch of spot Bitcoin ETFs.
As a crypto investor, I’ve noticed an intriguing transformation in the ownership landscape. Previously, the platform enabled institutions to tap into the value of the world’s premier digital currency. However, recently, there seems to be a significant power shift in terms of who holds the keys to this digital gold.
In contrast to past market cycles, the dynamics have shifted significantly. Previously, prices surged primarily based on retail participation and bullish sentiments. However, at present, I observe that the big institutional investors are the primary influencers. They possess the power to execute trades in vast quantities, which can substantially impact prices swiftly.
In the past, numerous minor adjustments in prices were required to cause a shift, which was the reason behind elevated activity levels compared to current ones, despite prices being down in the initial half of 2023.
If BTC continues to decline and breaches important support points, it’s probable that activity will decrease even more, given that institutions and retailers might become less involved. The situation could grow more challenging since large investors have been transferring their coins over the past few weeks.
On August 27th, a significant amount of Bitcoin, specifically those that are around three to six months old, were moved. In contrast, yesterday, or August 28th, a smaller quantity of Bitcoin, approximately one and a half years to two years old, was sent.
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2024-08-30 00:41