Key facts:
For the first time in its history, bitcoin price falls for seven consecutive weeks.
Retracement to the lowest value for a year and a half causes record liquidations of BTC.
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Despite a moderate rally in the price of bitcoin (BTC) on Thursday, May 12 and Friday, May 13, a seven-week red descending pattern is very likely to complete this Sunday for the first time in bitcoin history. .
Last week was the sixth continuous price decline, as reported on Monday 9 CriptoNoticias, and the downward trend continued until Thursday 12. As can be seen in the following chart, that day was recorded a new year-to-date low of $25,401a level not seen since December 2020.
The decline in the price of bitcoin so far this week is 13%. Despite the downward trend, from the mentioned low, a moderate surge in demand for this coin led to upward price actionas detailed in the next section.
Institutional investment in bitcoin returns
New institutional investments in bitcoin have been recorded since last week, reflected in new capital inflows into bitcoin funds and ETFs, such as the Purpose ETF in Canada. This fund received an investment of USD 56 million last week, and made this week its largest bitcoin purchase since its inception: 6,900 BTCequivalent to USD 210 million.
The graph shows the evolution of a new Glassnode metric that records the level of bitcoin accumulation, the Accummulation Trend Score (ATS). The level of accumulation is expressed by the intensity of the color. Light colors indicate low accumulation, starting from scratch. As the color gets darker it indicates more accumulation, with the maximum being 1.
How low can bitcoin fall?
After touching USD 25,000, the fear of the market increased. The Fear and Greed Index, where lower values are associated with higher levels of fear, went from 12 last Thursday to 9 this Saturday. This indicates that the market believes that the price may go down further.. Several analysts and traders believe that a further price pullback is possible. Some believe, however, that the decline will be temporary and that the medium and long-term price trend is bullish. MicroStrategy CEO Michael Saylor recalled that since he announced his BTC accumulation strategy as part of the firm’s strategic reserve, the cryptocurrency has risen 149%.
Network profitability decreases 10%
With the fall in the price of bitcoin, 40% of the network addresses are in loss, as reported by CriptoNoticias last Tuesday 10. At the end of March, the percentage of earning addresses was 70% and in a week it dropped to 60%. For this reason, the number of lost addresses was raised to 40%.
This percentage corresponds, with few differences, to the portion of the supply and of the entities that are in loss. The graph shows the percentages of the three categories that are in profit: supply, entities and addresses. As can be seen, they evolve in a very similar way. With the publication of the new weekly Glassnode report, this Monday 16, possibly the neutral situation of 50% addresses in profit and 50% in loss will be reached.
Featured chart of the week
In the previous section we saw how the addresses and the supply in loss increase, while the percentage of those parameters in gain decreases. These are symmetrical evolutions, in the form of a mirror around the 50% line. The following graph shows the two curves that, as we can see, overlap at a certain moment, when the supply in profit is less than 50%.
Those areas of overlap have historically corresponded to bitcoin price floors in 2011, 2015, 2019 and 2020. The hypothesis here is that an overlap is approaching, so we could be close to a new price floor that precedes a bitcoin bull run.
BTC liquidations reach record
Last Thursday the 12th, coinciding with the minimum price already mentioned, bitcoin registered a record settlement value of USD 2,200 million, as reported in this information portal. Amid the price collapse, traders were mostly betting on a steeper decline, although a subsequent price rally led to the liquidation of those bearish positions. Settlements increased more than 150% that Thursday, compared to what was settled the day before.