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
Price down today while whale holdings went up by ~13,000 BTC. Funny how that works. pic.twitter.com/a6tb2DiqxH
— Will Clemente (@WClementeIII) August 18, 2021
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."
New evidence for a #Bitcoin double bubble.
— Charles Edwards (@caprioleio) August 18, 2021
In prior cycle tops, bounces were never able to hold unrealized profit and loss above 0.5
Only the 2013 double bubble and today have achieved this.
Data: https://t.co/I5S3E37w8A (@PermabullNino) pic.twitter.com/23ZQOnOBil
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.
Author
Ekta Mourya
FXStreet
Ekta Mourya has extensive experience in fundamental and on-chain analysis, particularly focused on impact of macroeconomics and central bank policies on cryptocurrencies.
