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

Table of Contents

CoinEagle.com

Other articles published on Aug 23, 2024

RFK Steps Down from Arizona Race, Donald Trump Announces Special Guest for His Rally

After MATIC, Cardano Is Making Recovery Attempts After Flipping $0.38

Shiba Inu (SHIB) to Face 500 Trillion Battle: Details

XRP Price Prediction: Analyst Predicts Fiery Short-Term Action with $11 XRP Target by 2025

El Salvador’s Bitcoin holdings grow by 162 BTC with daily buys

AAVE Back in The Top 50 as BONK Drops Out; Analysts Tip New Viral Star Rollblock to Surpass Both

Join our free newsletter for daily crypto updates!