Bitcoin (BTC), which was trading in tight range until June 4, was not affected by traders’ demand for a new macro low.
BTC/USD 1-hour candle charts (Bitstamp). Source: TradingView
Distribution begins for long-term holders
Data from TradingView and Cointelegraph Markets Pro showed that BTC/USD remained between $29,000 and $35,000 throughout the weekend.
Although the pair had seen a slight recovery to $31,000 on the previous day, the Wall Street trading session that ended the week proved to be too much for bulls.
The potential direction of an inevitable breakout was evident as “out-of hours” markets had low volumes and little volatility.
The trend continuation is still evident in the weekly Bitcoin chart. Crypto Tony tweeted that he believes we will consolidate in this range for a while before dropping eventually.
Another post reiterated the target of $22,000 to $24,000 for Bitcoin after the forecast drop.
“I am looking to see a drop down to $24000- $22000, but distribution takes time.” It read, “So we may be hovering about this support zones before any drops just yet.”
Others were also planning to take advantage of the incoming weakness. Cryptotoad, a popular Twitter account, announced a strategy of accumulating at $27,000 or less in what would be “swing low” BTC/USD.
$btc While I don’t know your plans, my plan is to begin accumulating my long-term position at 27k swing low and all the way to the 0.382 fib of 21.5k. #btc #bitcoin pic.twitter.com/JCdHv0pMdr
— Cryptotoad (@Mesawine1) June 4, 2022
Cointelegraph reported that other sources are also keen to lower Bitcoin prices, ranging from on-chain analysts and well-known pundits like Arthur Hayes, ex-BitMEX CEO.
CryptoQuant data, an on-chain analytics platform, added fuel to the fire. It indicated that long-term holders were beginning to sell their stock in a classic bear markets move.
“Long-term holders have begun to capitulate,” Edris, a contributing analyst, stated in one of the QuickTake market updates published on June 3.
Edris made comparisons between the conditions that predated generational bottoms in Bitcoin’s past history, commenting on a chart showing long-term holders’ Spent Output Profit Ratios (SOPR). These include the 2018 and 2014 bear markets as well as March 2020’s COVID-19 cross market crash.
The post stated that “currently, the long-term owners are entering the capitulation stage and are selling at loss. This indicates that the smart money accumulation period has begun and the next few month would offer a great opportunity to long-term invest in the market.”
It also noted that capitulation events “often mark a multi-year top.”
Screenshot: SOPR chart for Bitcoin long-term holders (screenshot). Source: CryptoQuant
Big buys are still seen at exchanges
As if to suggest that people were already buying the dips, exchange data revealed that outflows had been significantly outpacing inflows in recent days.
Related: More than 200K BTC are now in Bitcoin ETFs.
Glassnode, an on-chain analytics firm, reported that netflows from major exchanges reached -23.286 BTC on June 3. This is the highest since May 14.
Bitcoin exchange netflows chart. Source: Glassnode
In the latest edition “The Week on-Chain”, Glassnode’s newsletter discussed long-term holder behavior. Checkmate, a leading on-chain analyst at Glassnode, also identified the types of investors most interested in selling.
He wrote that those who bought at or near the November 2021 all time highs “appear to have relatively low price sensitivities,” and added that this investor profile was becoming more full of stubborn hodlers.
He said that despite continued price declines and a major spot liquidity event of 80k+ BTC they are still unwilling to let go of their coins.
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