Bitcoin (BTC) price action suggests the asset remains volatile, and recent report ARK Invest said that the Bitcoin supply as a percentage of profits fell by 14 percentage points in August, leaving short-term Bitcoin investors with no choice but to capitulate.
While many traders view the sharp price drop at this point in the Bitcoin halving cycle as a buying opportunity, the notable bearish move is the price of Bitcoin falling below the 200-week moving average for the first time since June 2023.
As shown in the chart below, the 200-WMA typically acts as a key support level during major downtrends, and ARK suggests that any future bearish catalyst could lead to a drop in BTC prices to $20,300, where the realized price is currently located.
While the short-term outlook for the cryptocurrency market is rather bleak, a more bullish view on Bitcoin breaking below the 200-WMA would highlight the fact that a break below realized prices and long-term moving averages presents a cyclical buying opportunity. Investors who accumulated funds in 2019, 2020 and early 2022 when prices fell below both indicators found themselves pocketing huge profits over the next six months.
Analyst Ben Lilly recently hint A similar pattern is seen in the Bitcoin Dominance Indicator, suggesting that “Bitcoin is about to dominate again.”
According to Lily:
“In terms of price action, right now I see a lot of similarities to what happened in 2019. That makes me expect a trend in bitcoin over the next few weeks and possibly months. It’s tied to bitcoin’s dominance (BTC.D), which is a measure of Bitcoin’s share of the cryptocurrency market based on its market capitalization. In the chart below, we can see that the 2019 rally started in 2018 when we formed a nice Double bottom (red box), followed by a steady rise until Q1 2019. We then trended down for a few months (first red arrow) before a huge reversal on April Fools (first green arrow). “
Comparing market participant sentiment in 2018-2019 to current market sentiment, Lilly said today’s price action reminded him of the period before the reversal in 2019, when “we were in the middle of winter and everyone was out of energy and nobody Care about bitcoin or cryptocurrencies.”
Stablecoin market capitalization data also reflects the lack of investor bullish sentiment, according to ARK, “the total stablecoin 90-day supply has fallen from $162 billion in March 2022 to $120 billion today, a drop of more than 20% “This fact speaks to the decline in market liquidity and investor confidence in Bitcoin and altcoins.
Obviously, almost every retail and institutional investor is considering a spot bitcoin ETF, and unless the ETF is approved, or the upcoming bitcoin halving narrative takes precedence over the “ETF approval triggers bull market narrative”, the above market dynamics are likely will happen. Stick to it.
This article does not contain investment advice or advice. Every investment and transaction involves risk, and readers should do their own research when making a decision.
Svlook
