On-chain analysts bullish on Bitcoin, calling the recent downswing “mid cycle consolidation”

  • Long-term Bitcoin holders have bought nearly 750,000 BTC worth 33.8 billion in the last month and half. 
  • On-chain analyst Will Clemente observes that the current price action is similar to that in 2013 and 2016 ahead of a BTC bullrun.
  • Traders' outlook on Bitcoin turns bearish with low levels of daily trade volume and piling short positions.

There is an increase in sell-side pressure on Bitcoin with an increase in new buyers. This is absorbed through accumulation by long-term holders. 

Mid-cycle consolidation observed in Bitcoin as long term holders accumulating BTC ahead of "double bubble"

Bitcoin is currently range-bound below $45,000. Analysts consider the fatigue observed in the Bitcoin market as a sign of profit-taking by retail traders, while institutions and large wallet investors add to their holdings. 

Will Clemente, the lead insights analyst at Blockware, a Blockchain infrastructure and cryptocurrency mining company, tweeted

Clemente notes that long-term holders have added $585.1 million worth of Bitcoin to their holdings. Historically, institutional investors scoop BTC off exchanges ahead of a meteoric price rise, based on the trend noted in 2016 before the bullrun. 

In a recent interview with Jay Gould, a serial tech entrepreneur, Clemente explained how interesting it is to watch the current market dynamic. He said,

Long-term holders are buying harder than ever; they have bought almost 750,000 coins in the last month and a half or so; it's been pretty wild to see that kind of dynamic play out.

According to analysts, the current price trend in Bitcoin is a precursor of a "double bubble." 

When new investors enter the market, they create additional liquidity, which triggers a surge in the asset's price. Traders may know the actual value of the asset based on their previous estimates. However, the flood of liquidity drives a price rally. The asset's newfound value exceeds the prior forecast, resulting in a "double bubble."

In his recent tweet, Charles Edwards, the founder of Capriole investments, a crypto fund, presented new evidence for the "double bubble."

Though institutional investors are bullish, retail traders are bearish on the current BTC price trend. 

Simon Peters, a market analyst at trading platform eToro, observes, 

The price has rebounded strongly now, but this upward move is showing some signs of short-term fatigue. We could see a small retracement down to lower prices before the prevailing trend reasserts itself.

Analysts at FXStreet agree with the bearish outlook and predict that a crash to the $15,000 level is likely. The current Bitcoin price action mimics previous cycles ahead of massive consolidation.


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