Bitcoin’s price has been declining over the past few days, almost reverting all gains from the past greenish week. In fact, Bitcoin lost over $6K over the past 3-days.
However, there is a positive sign for the bulls: Despite the fear and uncertainty in the market, the divergence between the long-term holders (accumulating) and short-term holders (spending in loss) is much more significant in this crash compared to May 2021’s 50% drop.
The Daily Chart
As mentioned in our previous analysis, the price has been rejected impulsively from both the 100-day moving average and the $45K resistance level.
BTC also broke below the 50-day moving average, spreading fear all over the market once again. However, there is still the chance to reclaim back above the significant moving average line over the past few days. In that case, we might see another attempt towards the $45K resiatnce.
On the other hand, if BTC fails to recover in the next couple of days, the next support level would be the $36K area that the bulls defended the last time it was tested last Thursday, on the day of the Rissian’s invasion.
The 4-Hour Chart
On the 4-hour time frame, it was evident (and mentioned here) that the uptrend was showing weakness while testing the significant $45K resistance, closing with huge wicks to the upside.
The RSI also indicated that the price was at ‘overbought’ at the top of the range, with values above 70.
Additionally, a bearish RSI divergence was also spotted by this oscillator, pointing to a possible correction in the short term. Currently, the RSI is entering the oversold area on the 4-hour time frame, indicating that a short-term bottom could be near.
The price also seems to be creating a continuation pattern in the shape of a bearish flag, and a breakdown of the lower trendline could cause much more pain towards the $30K barrier. This pattern would be invalidated in case of a bullish breakout of the upper line.
The chart below shows Bitcoin’s Spent Output Age Bands since October 2020.
This metric is known as Spent Output Age Bands (%), and it is a collection of all spent outputs created within a specific age band. Each colored band shows the total value of spent outputs generated within the specified age band. This indicator combines the behaviors of long-term and short-term investors, combined with the price.
As can be seen, there was more activity in the early stages of the bull run in Q1 2021, meaning higher demand. When comparing the drop from $65K to $29K in May 2021 and the recent bearish move from $69K to $33K (January 2022), it can be observed that long-term investors did realize more profits in May 2021.
Currently, a high proportion of the market’s activity comes from retailers, who sell their coins under psychological pressure while the long-term holders are holding and accumulating.
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Cryptocurrency charts by TradingView.