Bitcoin’s recent drop below the $60,000 mark, followed by another drop fall below $50,000may finally be showing signs of a reversal, as suggested by recent buying trends. These trends point to a robust accumulation phase among large-scale investors, commonly known as whales, who are taking advantage of the price decline to shore up their cryptocurrency holdings.
In total, Bitcoin addresses withdrew more than $1.7 billion worth of Bitcoin from various exchanges, marking the largest weekly outflow of funds in over a year.
Accumulation trend among Bitcoin holders
According to on-chain data from IntoTheBlock, Bitcoin addresses have been steadily accumulating the coin over the past week. The data is underscored by the analytics platform’s net flow data, which is key in predicting the upcoming rise or fall of cryptocurrency prices. The data highlights a significant change, showing that outflows from exchanges have far outpaced inflows, with a staggering $1.7 billion more BTC being withdrawn from exchanges than deposited.
BTC saw a massive net outflow of funds from exchanges last week of $1.7 billion, the largest amount in over a year.
This indicates a build-up of gigantic whales as a result of the recent crisis. photo:twitter.com/m4INbZmKmB
— IntoTheBlock (@intotheblock) August 9, 2024
Such an outflow of funds is typically interpreted as a sign that investors are deciding to hold on to their Bitcoins long-term, which in turn reduces the amount of BTC available for sale on exchanges.
What does this mean for the price?
Recent momentum in the broader investment world and increased volatility saw Bitcoin fall below $50,000 again last week. Interestingly, this drastic price drop marked the first time Bitcoin has traded below $50,000 in six months. Whatever the case, the price drop gave many crypto believers the opportunity to accumulate more BTC at a six-month low. This created buying pressure among some traders, which in turn helped support the price of BTC and helped prevent further declines.
The reduction in the number of Bitcoins available on exchanges could have significant implications for the market. With fewer coins available for sale, buying pressure could boost, potentially raising prices as demand remains stable or increases. At the time of writing, Bitcoin is trading at $60,989, with support established at $60,000.
Given the prevailing bullish sentiment, this buying pressure could also be the momentum that pushes Bitcoin price to the hard $70,000 price level. However, the trip to $70,000 presents four different resistance levels $63,730, $65,510, $67,350 and $69,150, respectively.
Buying pressure continues to persist in line with total flow into and out of exchanges. Total flow data shows negative 61.9% and 12.27% over the last 24 hours and 7 days, respectively.
However, Bitcoin is not out of the woods yet, as the market depth of on-chain exchanges shows that there are still more sellers than buyers. At the time of writing, sellers have placed sell orders for 31,458 BTC at an average price of $61,267 across various cryptocurrency exchanges. Meanwhile, buyers have placed buy orders for only 27,734 BTC at an average price of $61,263.
Featured image from Pexels, chart from TradingView
