After a deep correction since 2022, Bitcoin traders are ‘under pressure’
According to Glassnode data, Bitcoin 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 (BTC) 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, according to Glassnode, the deepest 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 setback, Glassnode's The Week Onchain newsletter reports that the correction is notably shallower than 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, this level will act as a major resistance zone, so the long-term outlook for the price of Bitcoin will be weak.
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 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 observes that a retracement of the 200-day EMA and a hold above $59,000 would be a “good start” for Bitcoin bulls.
Liquidity data from CoinGlass shows high short bids 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.
