Tuesday, July 5

Recent Bitcoin Price Drop Was Not Supported By Network Parameters

Key facts:
  • The price drop for bitcoin on December 4 reached $ 42,000.

  • Meanwhile, the accumulation of bitcoin held in almost all segments.

A recent report by Ecoinometrics argues that last week’s dramatic drop in the price of bitcoin (BTC), which reached a low of USD 42,000 on Saturday, December 4, is not consistent with the accumulation patterns of the different holder segments. .

On the other hand, the fall in the price of bitcoin in mid-April coincided with an increase in the incoming flows of BTC on exchanges, while the current situation is different, according to the analysis. In the past month, the study asserts, there have been significant flows of BTC leaving the exchanges.

The following graph shows the trends of BTC held in different address ranges, according to the number of coins. It starts with those addresses with less than 1 BTC and those between 1 and 10 BTC, on the left side.

The accumulation of bitcoin is on the rise for most of the holder segments. Source: Glassnode.

On the right side of the graph you can see the evolution of BTC in directions with ranges between 10 and 100 BTC, between 100 and 1,000 BTC and finally those between 1,000 and 10,000 BTC.

As can be seen, in the correction for April and May, the decrease in retained BTC is noticeable in all segments, except in addresses that hold between 100 and 1,000 BTC, associated with the “whales” of bitcoin.

In the latest correction, however, it is seen that the accumulation increases after November, except among whales. The decline of BTC in the hands of the latter segment, however, it is much lower than that registered in April and May of this year.

This is one of the reasons why the report refers to the recent correction as an atypical event, considering the fundamental parameters of the network.

BTC outflows from exchanges continue

Regarding the net inflows and outflows of BTC from exchanges, the next graph from Glassnode, updated to December 5, shows how BTC inventories rise on these platforms between May and early August. In this time span, the price of BTC followed a downward trend.

Percentage of bitcoin supply on exchanges. Source: Glassnode.

Today, however, even in the midst of the price correction, BTC inventories on exchanges follow a clearly downward trend. This is often interpreted as a bullish indicator, as it implies that investors are not interested in massively selling their bitcoins.

Several analysts referred to some manipulation maneuvers in the bitcoin market last Saturday, December 4, as we reported in this medium.

The point was made, in part, because the fundamental parameters of the network remained healthy. The sharp drop in price was due to large buy orders that were later withdrawn, but pushed the price lower and precipitated sell-offs in the bitcoin derivatives markets.

Among these analysts was the trader professional Willy Woo, who reiterated this Monday the 6th that there was a strong possibility that bitcoin has bottomed out during the weekend, as reported by CriptoNoticias.

At the time of writing, bitcoin’s price is $ 50,581, according to the CriptoNoticias price index. Since yesterday, which broke the psychological barrier of $ 50,000, the cryptocurrency has remained above that mark most of the time.


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