BITCOIN: We could potentially see a short-term price rally
It’s been a week after the LUNA and UST event and BTC sell off. Let’s take a look at what has been happening based on some Bitcoin metrics.
Let’s start this by looking at the Bitcoin Taker Buy Sell ratio (daily chart)
Recently, the MA 7 just moved past a 1:1 ratio for the BTC Taker Buy Sell Ratio. This indicates that there are more buying than there are selling.
In this chart, we also see that the MA 14 and MA 30 is starting to trend upward also indicating that more buys are happening. However, the MA 60 has not trend upward yet.
In this next chart below, I’m highlighting previous moments within 2021 where the MA 7 BTC Taker Buy Sell ratio has moved past 1:1 ratio.
Each time that it has moved past 1:1 ratio, there has been some sort of price rally. This has been a true case for both the bull market of 2021 and the bear market of 2021.
This next chart below highlights the period of time where there are more buying in the market.
In the summer of 2021, we saw prices rally upward as the result of buying.
In the first half of 2022, we saw prices correct as a result of buying.
I believe that a large reason for this correction is due to a spike in spending activities from larger Bitcoin holders.
This was the Spending chart recorded last week by holders ranging from 1 BTC to holders holding over 10k BTC.
In this chart above, we can see spikes in spending activities. We chose these supply distribution groups due to there being a combine of the groups holding a total of 95% of the BTC supply.
Image credit: Bitcoin Rich List by Bitinfocharts
Now recently, if we look closer at the hourly chart, the spending by BTC holders holding 1–10k+ BTC has started to slow down.
This indicates that there is potentially lower sell pressure in the market.
Next, we’ll look at inflows and outflows
In this chart, we see less inflows and outflows of BTC. Normally, for price to correct significantly, large inflows are required. A large inflow of BTC going onto an exchange normally indicates that someone is looking to sell. Recently, I have not seen large inflows since the recent sell off.
Currently, there’s low inflows with a sustainable amount of address inflow count. Spikes in address counts but low volume means that the inflows are not done by large holders.
seeing the taker buy sell ratio starting to trend upward and seeing that spending by majority of the BTC supply holders are starting to trend downward tells me that sell pressure is lessening and that buy pressure may potentially occur. In addition to this, inflows are lessening too which further decreases sell pressure.
One question to always keep on your mind is that, will another black swan event happen? if not then we may have just seen a local bottom with BTC hitting 25k before bouncing back up. In my opinion, we’ll probably see BTC bounce around the 30k price level for a while, with the potential to rally upwards as long as metrics continues as what I saw.
However, this might not be the bottom of the bear market. There’s still a lot of macros to consider. We will have to wait and see.
This article is not Financial Advice and is my analysis of the market from my interpretation of what I am seeing with charts. This article should only be use for entertainment purpose.