Despite the bearish sentiment dominating the market, analyst TechDev states that bitcoin (BTC) is being hoarded at the moment and the profit-taking phase has ceased. The analyst combines two metrics to support his appreciations: the accumulation of bitcoins by traders and the time they hold said bitcoins in their portfolios.
It manages to evaluate these results through indicators called accumulation trend score (ATS) and entity-adjusted inactivity flow (EADF). According glass nodeentity specialized in the study of blockchain networks, an accumulation trend score closer to one (lighter color) indicates that, as a whole, the largest entities (or a large part of the network) are accumulating, and a value closer to zero (darker colors) indicates they are taking profit.
First, the analyst contrast three regions of the price of bitcoin, marked with rectangles in the graph displayed below, in which two successive impulses of the price can be seen. These impulses occur after a notorious drop in price and correspond to the beginning of January 2019, the end of June 2020 and January 2022.
The 2019 and 2020 rectangles are preceded by a period of correction where the price dropped and then leveled off. The demarcated areas on the price curve coincide with a minimum on the second curve (blue), which is the idle flow (EADF). This curve refers to the number of days that a currency remained without moving or “sleeping”. Stagnant BTC indicates that buyers expect the price to rise, or simply consider it a valuable asset and are holding it.
The lows of the lower curve have historically marked the bottoms of the bitcoin price in a correction phase, as well as the restart of an accumulation phase that allows triggering a bullish rally.
By highlighting the third rectangle, which coincides with a low price in the period, the TecDev analyst suggests that we are currently at the end of the correction. In this way, forecasts that bitcoin would be bottoming before an imminent bullish rally. However, the EADF curve has not yet left the green zone with an upward trend, which is what marked the price rebound on the previous two occasions. In other words, the bullish rally has not yet started.
Bitcoin at a turning point
The following chart highlights the weekly support line that shows that the lows have a growing trend, as has already been commented on in CriptoNoticias. The price low has moved from $35,000 to $37,000, and now stands above $39,000.
Although a historical trend in such a short term is no guarantee that the upward momentum will be maintained, the lower curve of the Relative Strength Index (RSI), which indicates the asset’s oversold and overbought conditions, is forming a pattern. descending pennant.
What does this mean? Well, this would indicate, according to TechDev, that a consolidation phase would come before a rebound to a new bullish phase. “We have to wait and see if the RSI curve touches the pennant’s lower support again, or it’s time for a vigorous rebound,” TechDev concludes.
The price of bitcoin, which has experienced a moderate rebound and is trading, at the time of writing this article, at USD 39,675, would be influenced only 10% by the demand spot or in cash, according to an analysis by Willy Woo, commented by CriptoNoticias.
On the other hand, 90% of price changes would be influenced by futures traders, who oscillate between the concepts of risk-on and risk-off in the selection of high-risk or low-risk assets, depending on the configuration of the market. In this sense, we would still have to wait to see how this market behaves.