The questions surrounding whether Bitcoin [BTC] can maintain its bullish push have become more pressing lately. Especially as the crypto surged past $80,000 over the last 24 hours.
The timing is interesting because the market has been flashing mixed signals over whether demand is returning and a rebound is taking shape, or whether this is a local high that could lead to a drawdown.
Inactivity may be good for Bitcoin
According to Alphractal, Bitcoin’s 1-year active supply recently dropped to a low of 7.49 million.
The metric represents how much Bitcoin is active in the market. When the supply falls significantly, it suggests that fewer Bitcoin are being moved from their wallets.
Typically, when there’s a decline to this level over a 12-month period, it alludes to a strong willingness among investors to hold. The same is often driven by expectations of a rally in the near to long term.
Now, while this doesn’t confirm a bottom for Bitcoin, other factors did seem to hint at a gradual shift in market dynamics.
Bitcoin’s exchange reserves, according to CryptoQuant, fell after reaching a local peak of 2.73 million on 17th August. It had dropped to 2.70 million at the time of writing.
A decline in BTC balances across exchanges means there is less Bitcoin available to be sold on the market. This could, to some extent, protect the price from a sudden crash.
Is there a bottom signal?
There’s no clear sign that the bottom for BTC is in yet. However, there are still some worrying signs for the world’s largest cryptocurrency.
For instance, recent data indicated that while market activity has been subdued, Bitcoin’s rally has faced significant sell pressure. Sellers offloaded roughly $1.2 billion worth of BTC between 23rd August and 1st September, averaging about $120 million in daily sales.
That’s not all either. Bitcoin’s apparent demand also flipped negative over the last 24 hours, suggesting that distribution may be ongoing.
Finally, CryptoQuant also revealed that netflows saw roughly 127,940 Bitcoin exit exchanges. This alluded to weaker demand and a gradual hike in available supply.
Now, while this remains a key threat to the price, a previous analysis from AMBCrypto suggested that the $76,000-level will remain a key test for BTC. It could determine whether the market sees another decline. Despite the cryptocurrency’s recent foray past $80,000.
For now, sellers are using the recent rally to take profits. All while the market shows no clear confirmation of a Bitcoin bull run.
Final Summary
- Bitcoin’s falling 1-year active supply and exchange reserves hinted that investors may be holding onto their BTC.
- Hike in sell pressure and negative apparent demand leaves the $76,000-level as a key test for Bitcoin.