Yesterday, Bitcoin (BTC) tumbled below the $90,000 mark, causing a stir among investors concerned about its short-term viability. Nevertheless, it has managed to bounce back and is now trading above $96,000 as I pen this update.
This swift rebound hasn’t gone unnoticed by market experts who are keenly dissecting the forces at play behind Bitcoin’s price swings.
Is Bitcoin’s Rise Above $96k a Stop Hunt?
In a recent analysis, CryptoQuant contributor Mignolet delves into the recent upheaval in Bitcoin pricing. Mignolet suggests that the dip to $89,000 and the subsequent recovery was triggered by a breach of a crucial short-term support level. He describes this as “stop hunting,” where prices temporarily break support levels before rising again. Despite this rebound, Mignolet stresses that a genuine trend reversal would need substantial engagement from key market players.
The analysis highlights substantial selling by whale entities, as seen through Coinbase Premium Gap (CPG) data. Typically, these whales absorb dips, creating significant market fluctuations.
However, current observations didn’t see such whale activity, casting doubt on the durability of this recovery. Moreover, Binance’s market-buy ratio data indicates that major buyers have not jumped on this price movement, reflecting a cautious approach among significant investors.
Further insights from Mignolet come from ETF inflow and outflow data, which has yet to reflect any substantial market shifts.
While the daily candle pattern shows a potential significant move, the lack of whale participation might hinder Bitcoin’s prospects for a sustained long-term reversal. Mignolet also voiced caution, warning that without clear data, market optimism might be premature. He expressed:
"The candle pattern signifies a noteworthy move, yet major players are not seizing the opportunity. What concerns me more is that many people’s sentiment might too quickly tilt towards relief."
Bitcoin Market Performance
Following a steep drop below $90,000, resulting in a liquidation exceeding $300 million across the crypto market, Bitcoin appears to be turning the tide on its recent bearish trend.
In the past 24 hours, Bitcoin surged by 5.6%, climbing to $96,351. Despite this uptick, the cryptocurrency remains about 10.8% shy of its last month’s high of over $108,000.
Although Mignolet cautioned that Bitcoin’s bearish phase may not be over just yet, it’s notable that this recovery aligns with reduced selling pressure from long-term holders.
In another analysis, CryptoQuant contributor Darkfost pointed out a change in the net positions of long-term holders (LTHs) over the past month. Although still negative, the figure improved from -827,000 BTC on December 5 to -246,000 BTC.
This decrease in selling pressure implies that LTHs are reluctant to offload Bitcoin at the current low prices. However, Darkfost observed that for the bullish momentum to solidify, LTHs would need to switch to accumulation mode rather than reducing sales.
Featured image created with DALL-E, Chart from TradingView
