After the Biden administration and Republican lawmakers reached a preliminary agreement on the US Debt limit, Bitcoin briefly recovered $28000 of lost ground for the first time since the beginning of this month. However, according to Bitcom terminal data, as of the time of press release, Bitcoin fell below $28000, and the Ethereum transaction price hovered around $1910
After the Biden administration and Republican lawmakers reached a preliminary agreement on the US Debt limit, Bitcoin briefly recovered $28000 of lost ground for the first time since the beginning of this month. However, according to Bitcom terminal data, as of the time of press release, Bitcoin fell below $28000, and the Ethereum transaction price hovered around $1910.75.
From a liquidity and macro perspective, due to the lack of active catalysts, Bitcoin may record its first monthly negative return since November last year.
Stalking supply indicators for giant whales
According to data from on chain analysis company Santiment, the 'supply distribution' indicator shows that BTC whales have become more cautious in the past few weeks. Supply distribution measures the total amount of Bitcoin currently held by each wallet group in the market.
Santiment defines the holding capacity of the Giant Whale Wallet as 10-10000BTC. The following figure shows the supply distribution trend of this address group in the past few months:
From the above figure, it can be seen that the total holdings of these addresses began to decline after a surge in March. When these investors sell off, prices mostly consolidate sideways, which means it is precisely these groups' selling that may have slowed down the upward trend. Then, in mid April, as BTC hit a local top near the $31000 mark, the supply of giant whales instead hit a local bottom. As prices showed a downward trend, these investors subsequently began to increase their holdings. This pattern means that these holders are starting to use low points to buy again.
Data shows that since the start of the increase in holdings after the local high in April, the wallets of these addresses have increased by approximately 93000 BTC (at current prices, it is $2.6 billion).
However, in recent weeks, the supply of these addresses has started to stagnate, and this new sideways trend may indicate that major investors are now cautious about buying more, as they are unsure where BTC will go next.
Liquidity hovers at a low level
As last week's Debt limit negotiations put pressure on crypto investors, the latest minutes of the Federal Reserve meeting also showed that central bank officials had differences in the direction of interest rate increases. The correlation between Bitcoin and gold has fallen from its historical high this year, and began to behave more like a risky asset.
Yuya Hasegawa, a crypto market analyst at Bitbank on the Japan Bitcoin Exchange, said that Bitcoin is currently testing its resistance level for March at around $28800.
The crypto market has been lacking liquidity incentives recently. In the medium term, funds will be withdrawn from high-risk assets and used to purchase government bonds. The result may be a further slowdown in trading volume and liquidity in the stock and digital asset markets, with potential negative impacts on prices, "said Matteo Greco, a research analyst at Fineqia International, an investment firm, in his report.
Glassnode Chief Chain Analyst James Check stated that after experiencing a long period of exceptionally low volatility, the next major price trend for Bitcoin may be imminent and could push BTC up to $32000. In an interview with Cointelgraph, Check explained that this price level is the "true cost foundation" of Bitcoin.
In order to calculate the average cost basis of Bitcoin (the average price for purchasing BTC), Check and his team removed permanently lost or dormant tokens from the calculation, focusing on active Bitcoin investors. He said, "This is where the mean regression level is located, so to be honest, rebounding to that level won't surprise me
Despite this bullish situation, Check also pointed out that a large number of investors may be tired of the bear market and wait for Bitcoin to reach that level before selling, thereby putting pressure on prices: "This is the area where you are starting to encounter more resistance.
Correlation of U.S. Dollar Index
The price trend of Bitcoin is closely related to macroeconomic conditions. In recent weeks, Bitcoin has been kept below $30000 due to such adverse factors as the strength of the U.S. Dollar Index (DXY), the rebound of interest rates and the possibility of further interest rate hikes by the Federal Reserve.
Glassnode co founder Yann Allemann analyzed the possibility of Bitcoin rebounding under changes in DXY and interest rates in his tweet.
In addition, changes in macroeconomic conditions may enhance the momentum of Bitcoin. Congress will vote on the legislation as early as Wednesday. Whether the Debt limit agreement can be passed on Wednesday remains to be seen.
Up to now, the transaction price of Bitcoin is $27782. If there is no major good news stimulus, Bitcoin and Ethereum may welcome the worst month since last November.
Thank you for watching. I will conduct a more detailed analysis in the communication circle. Friends who like me can click like and follow me. See you next time!
Disclaimer: The content of this article is sourced from the internet. The copyright of the text, images, and other materials belongs to the original author. The platform reprints the materials for the purpose of conveying more information. The content of the article is for reference and learning only, and should not be used for commercial purposes. If it infringes on your legitimate rights and interests, please contact us promptly and we will handle it as soon as possible! We respect copyright and are committed to protecting it. Thank you for sharing.(Email:[email protected])
