Plunge

Bitcoin

<h2 id="key-points">Key Points</h2> 
<ul> 
 <li>Bitcoin’s short-term holders’ average cost basis indicates a potential local top for the cryptocurrency.</li> 
 <li>Whale accumulation trends and other metrics suggest a continued downtrend for Bitcoin.</li> 
</ul>  
<p>Bitcoin is projected to maintain a downward trend in the forthcoming weeks.<br> This is indicated by the average cost basis of short-term holders, which suggests a potential local peak for <a href="https://coineagle.com/price/bitcoin/">Bitcoin (BTC)</a>.</p> 
<h2 id="bitcoin-s-volatile-movements">Bitcoin’s Volatile Movements</h2> 
<p>Over the past few days, Bitcoin experienced significant volatility. On August 21st, it peaked at $61.8k, only to drop to $59.7k a few hours later.<br> These fluctuations could be attributed to the liquidity pools that have accumulated around BTC recently.</p> 
<p>The cumulative liq levels delta was significantly positive, indicating a short-term price pullback to flush out overeager bulls.</p> 
<h2 id="short-term-holder-cost-basis-as-a-barrier">Short-term Holder Cost Basis as a Barrier</h2> 
<p>CryptoQuant analyst Burak Kesmeci suggested that the realized prices of short-term Bitcoin holders could be used to identify resistance zones.<br> These are individuals who have held BTC in their wallets for less than 155 days.</p> 
<p>Kesmeci observed that the 1-3 month BTC holding group had an average cost basis of $64k, while the 3-6 month group had an average cost basis of $66k.<br> With market prices below this zone, most of these holders were likely incurring losses.</p> 
<p>Therefore, a price increase into this area would likely prompt underwater holders to exit the market at near break-even, potentially increasing selling pressure.</p> 
<h2 id="whale-accumulation-distribution-trends">Whale Accumulation/Distribution Trends</h2> 
<p>Wallets holding between 10k-1M BTC witnessed a sustained accumulation phase from early December 2023 to late January 2024.<br> During this time, the price of Bitcoin appreciated by 16%.</p> 
<p>By March, BTC had increased by another 70%, but this was accompanied by the BTC whale cohort (those with more than 10k coins) distributing and taking profits during the rally.</p> 
<p>This whale cohort has been in a distribution phase for the past six weeks, despite Bitcoin’s price performance not being strongly bullish.<br> This implies an anticipation of a price dip and continued downtrend.</p> 
<p>The 1-month liquidation heatmap more clearly illustrates the range potential.<br> The substantial liquidity at $63k, $67k, and $70k is likely to attract prices in the coming weeks.<br> However, the liquidity built up at $54k and $49k are also significant magnetic zones.<br> Currently, the price action and whale accumulation trends do not favor a breakout past $66k.</p>

Why Bitcoin Could Plunge to $54K – The Key Factors at Play

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CoinEagle.com

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