After a deep correction since 2022, Bitcoin traders are ‘under pressure’
According to Glassnode data, Bitcoin (BTC) will experience a “deep correction” in 24 months, which will affect short-term holders (STHs) with unproven losses.
According to data from Cointelegraph Markets Pro and TradingView, the price of Bitcoin fell more than 16.5% in the last fall from $63,801 on July 1 to a swing low of $63,499 on July 5 in what Glassnode described as a “deep” correction since the end of 2022.”
Between May and July, the market experienced a deep cyclical correction, registering a decline of more than -26% from the ATH.
Despite this decline, Glassnode's The Week On-chain report indicates that the correction is shallow compared to previous cycles. He points to a strong market structure and that “volatility will decrease as Bitcoin matures as an asset class.”
“If we evaluate the low price performance from each cycle, the 2023-24 market has behaved similarly to the previous two cycles (2018-21 and 2015-17). Why Bitcoin is following this path is a topic of constant debate, but provides a useful framework for analysts to think about cycle structure and duration.” It keeps on giving.
Analysts at Glassnode said that with the sale, 83% of the supply was controlled by short-term holders – addresses that have held Bitcoin for less than 155 days – falling to undisclosed losses.
According to the chart below, of the 3.2 million BTC ($184 billion) held by STHs, 2.9 million BTC (about $166.75 billion at current rates) have been pushed below their value, reaching around $53,000 in the recent selloff.
According to Glassnode analysts, this has put a lot of pressure on Bitcoin and the broader crypto market.
As long as the price of BTC remains below $58,000 in the next few days, the long-term view of the price of Bitcoin will be weak, as this level will act as a critical resistance zone.
At the time of publication, Bitcoin was trading at $57,485 and compared to the support that was fighting strong resistance on the way to recovery.
The chart below confirms this, showing that the 200-day Exponential Moving Average (EMA) at $58,180 has provided the first line of defense for the bulls. Another hurdle could emerge from the $63,880 level, where both the 50-day and 100-day EMAs appear to be converging.
A strong sell-off from this bearish congestion zone can dampen any attempts to push the price higher as investors take profits or break even.
Prominent analyst Daan CryptoTrades sees a retracement of the 200-day EMA and a hold above $59,000 as a “good start” for Bitcoin bulls.
Liquidity data from Coinglass shows that short bids are building near the 200-day EMA at $58,587, confirming the importance of this level.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
