Bitcoin Price Drops to $29.5K, But On-Chain Data Shows Growing Investor Interest

Bitcoin (BTC) price plunged below the $30,000 level on July 18, which retail investors may not have expected given the past month’s development, but does today’s drop represent an upcoming change in trend?

The data shows that this does not happen in the long term.

Moving to the positives first, bitcoin price is attempting to retest the $30,000 level as support after about 10 attempts since April this year, but the price is constantly finding buyers in the $28,000 to $25,000 range, which is being looked at by buyers. Viewing as an accumulation. Area.

On-chain data from Glassnode’s Bitcoin Accumulation Trend Score supports this sentiment and could be positive, depending on how investors view things, given the investor behavior at $30,000 BTC price. Shows similar accumulation behavior seen in the $28,000 to $24,000 area and near the expected low of $16,800.

According to Glassnode, “an accumulation propensity score close to 1 indicates that overall, large entities (or a large portion of the network) are accumulating, and a value close to 0 indicates that they are distributing or Not depositing.”

Basically, the buyers accumulated heavily from Nov 2022 to Dec 2022 and were heavy hoarders from March to April 2023 when BTC retook $30,000 and metrics show they are doing the same in July as BTC either attempts to conquer or take the $30,000 resistance. Boosted by all the ETF and XRP SEC news.

bitcoin is in a crab market

Current price action and derivatives market data suggest that bitcoin is in a crab market, where the price remains range bound and consolidating in the long run. As JLabs analyst JJ The Janitor pointed out last week, a strong push through the $32,000 level would catalyze Luna to fill the CME gap from the Terra-crash era.

From a weekly market structure perspective for bitcoin, the $30,000 level is an important pivot point that has served as support in previous bullish market cycles (and now as resistance), but holding above that level will inevitably lead to losses. Will set a higher high in the long run. frame and confirm a trend reversal with the next point of resistance near the $37,000 level.

Another factor contributing to the current crab market is the activity of traders in the derivatives market. Funding is thin, open interest is relatively low and apart from retail folks who are attempting to retest long breakouts and long low support, or short breakouts and liquidation in both instances, a meaningful bounce in these metrics Which would inspire confidence that the price is on the verge of some major breakout yet to emerge.

Sure, the DXY dipped below 100 last week, but that’s probably tied to investor reaction to the Fed’s positive moves on inflation and the time frame is too short to expect some big reaction from BTC right away. .

Price action in crypto exchange futures highlights that Dagan longs and shorts are attempting to outpace price breakouts and are not having much success in the short term.

JJ the Janitor suggests that one metric to watch is overall open interest, which if a bullish break from the current range could present some real downside opportunities. Currently, it is still in an uptrend, albeit sideways, but it could be interesting to see an increase in OI and possibly driven by a news, regulatory or legislative event.

Connected: Bitcoin price drops below $30,000 as macro and regulatory concerns take center stage

While bitcoin’s short-term price action may be causing some concern among new investors and daily traders, the on-chain outlook remains quite attractive.

#bitcoin The long-term holder supply remains at an ATH of 14.5M BTC. This shows that mature investors are preferring to accumulate bitcoin rather than distribute it. pic.twitter.com/VkY9uTAVGG

— Glassnode (@glassnode) 18 July 2023

Additionally, the total balances in the accumulation addresses metric has also resumed its uptrend since March 16, when the BTC price was trading at $25,000.

Readers should also note that the metric shows total balances in accumulation addresses increasing since January 2022, when the bitcoin price was trading at $47,800 per coin. What is clear is that during the worst of the crypto market collapse and bitcoin price selloff, several on-chain metrics show that investors are continuing to increase their allocation to BTC.