Bitcoin (BTC) hit a two-month low this week, but evidence suggests that the bottom for BTC prices may be coming.
Cointelegraph Markets Pro and TradingView We continue to track the continued rebound in BTC/USD after rising to $38,500.
The dust is settling on the first two weeks of trading for the first U.S. spot Bitcoin exchange-traded fund (ETF). Outflows from the Grayscale Bitcoin Trust (GBTC) appear to be calming down, with optimism gradually increasing regarding an overall reduction in institutional selling pressure.
On-chain indicators similarly suggest “oversold” market conditions, and with Bitcoin currently down 20% compared to local highs, we can expect a more sustained BTC price recovery. Maybe.
But nothing is certain. This month, even long-term holders have maintained bull and bear market trends alike, showing capitulatory behavior.
Cointelegraph is keeping an eye on these topics as a consensus slowly forms on whether Bitcoin has hit the bottom.
GBTC: Do you see light at the end of the tunnel?
The current hot topic regarding BTC price trends is the first spot Bitcoin exchange-traded fund (ETF) in the United States.
Since its launch on January 11th, the ETF has seen billions of dollars in inflows, but so far it has led the downside of BTC/USD by more than 20%.
Market participants have linked this phenomenon to one ETF in particular: Grayscale Bitcoin Trust (GBTC). The conversion to ETFs allowed investors to exit after being “locked in” for years. Investors may invest in another spot Bitcoin product, but regulations require a cooling-off period of at least one month.
Hmm,
GBTC cannot print Bitcoin.
This sale is very limited and not sustainable.
— hodlonaut 80 IQ 13%er ⚡ (@hodlonaut) January 23, 2024
vast tranche of BTC was transferred by Grayscale to administrator Coinbase, but critics argue this has little to do with the downward pressure Bitcoin has seen since then.
Rather, it may be due to sales and liquidation of derivatives by the dysfunctional exchange FTX.
The former is finite and may have already ended. Also, as GBTC outflow itself is decreasing day by day, this week's low price of BTC/USD is likely to be maintained.
NVT mimics 2022 bear market
Classic Bitcoin on-chain indicators came as a surprise when BTC price fell towards $38,000.
The Advanced Network Value to Transaction (NVT) signal currently indicates that the value of recent transactions is correspondingly lower when viewed as a portion of the overall Bitcoin market capitalization.
NVT Signal attempts to compare the total value of trades over a 90-day lookback period to Bitcoin's market capitalization at a given point in time.
Advanced NVT adds standard deviation bands to help identify when BTC is relatively overbought or oversold.
The recent decline has spurred a retreat into the lowest standard deviation range, suggesting $38,500 is an unnaturally low price range.
As noted by Philip Swift, creator of on-chain statistics resource Look Into Bitcoin, the drop in NVT is the first for Bitcoin since the depths of the bear market in 2022.
“It's interesting to see Advanced NVT enter the green oversold band for the first time in this bull market,” he wrote in part of the article. Dedicated X post.
Bitcoin hodlers issue “sign of surrender”
When it comes to capitulation events, this week's lows tested the confidence of both speculators and veteran hodlers.
Related: Bitcoin price risks $30,000 from 'excessive' inflation — Arthur Hayes
On-chain data proves it. Even long-term holders (LTHs), defined as entities holding for more than 155 days, were transferring their coins to exchanges at a loss.
Long-term holders transferred over $430 million in value #bitcoin Lost to the exchange, January 22nd #bitcoin It was less than $39,000.
More signs of surrender. It's getting closer. pic.twitter.com/La2a2GIz81
— James Van Straten (@jvs_btc) January 25, 2024
This is something of a follow-up move to BTC/USD pulling back from its two-year high of $49,000 shortly after the ETF's launch. Short-term holders (STH) were then at the forefront of the sell-off, with similarly large numbers of BTC moving below their acquisition price.
James Van Straten, research and data analyst at cryptocurrency insight firm CryptoSlate, was cautious in commenting on the scale of the move. He reasoned that LTH was on the brink and that a more violent capitulation was still possible.
“This situation eerily mirrors the pre-Luna capitulation witnessed in May 2022. At the time, almost the same amount was transferred to exchanges at a loss, followed by the plummeting value of Bitcoin just a week later. Even more severe losses followed, exceeding $600 million, just before “shockingly falling below $20,000,'' he suggested. research post.
“Recurrence of such losses could indicate increasing evidence of capitulation among long-term Bitcoin stakeholders.”
This article does not contain investment advice or recommendations. All investment and trading moves involve risk and readers should conduct their own research when making decisions.
