August has proven to be an exceptionally eventful month for both equity and digital asset markets, marked by a significant market sell-off triggered by a “correlation-1” event.
Bitcoin has been no exception, experiencing its largest drawdown of the current cycle, leading to capitulation among short-term holders.
August has already been a exceptionally eventful month across both equity and digital asset markets, after a “correlation-1” event sparked a major market sell-off. #Bitcoin has been no exception, recording its largest drawdown of the cycle, causing capitulation amongst… pic.twitter.com/o3FsmscNvn
— glassnode (@glassnode) August 7, 2024
Despite the recent price decline, large Bitcoin holders have increased their $BTC holdings. During the recent correction, the number of Bitcoin addresses holding 100 or more BTC rose from 15,913 to 16,006, indicating that whales have been buying the dip. However, Bitcoin ETFs saw net outflows on Monday, reflecting a more cautious sentiment among some investors.
The number of $BTC addresses holding 100+ #BTC increased from 15,913 to 16,006 during the recent correction, indicating that #Bitcoin whales bought the dip. pic.twitter.com/3oSPGFjCq8
— Ali (@ali_charts) August 7, 2024
Analyst Ali Martinez notes that the TD Sequential indicator on Bitcoin’s 4-hour chart is signaling a potential correction, suggesting that further adjustments may be ahead.
The TD Sequential indicator shows a sell signal on the #Bitcoin 4-hour chart, suggesting a potential correction ahead! pic.twitter.com/LiPQu0FmP9
— Ali (@ali_charts) August 7, 2024
Bitcoin On-Chain Data Summary
Bullish Indicators:
– Hashrate Recovery: Miner capitulation appears to be nearly over, with hashrate approaching all-time highs. The U.S. mining cost is around $43K per BTC, suggesting that hashrate stability will likely continue unless prices fall below this level.
– Whale Accumulation: There have been significant inflows of BTC into custody wallets. Permanent holder addresses have increased by 404,000 BTC, including 40,000 BTC in U.S. spot ETFs over the past 30 days, indicating new whale accumulation.
– Retail Absence: Retail investors are largely absent, reminiscent of the mid-2020 market conditions.
– Reduced Old Whale Activity: Old whales who held their BTC for over three years have sold their holdings to new whales between March and June. Currently, there is no significant selling pressure from these old holders.
Bearish Indicators:
– Macro Risks: Broader macroeconomic risks could trigger forced sell-offs. Recent large crypto deposits by Jump Trading and Binance hitting a year-to-date high in daily deposits could be a sign of increased volatility.
– Bearish Indicators: Some on-chain metrics have turned bearish, though they are borderline. If these trends persist for more than two weeks, a market recovery could face significant challenges.
#Bitcoin On-chain Data Summary:
Bullish
• Hashrate Recovery: Miner capitulation is nearly over, with hashrate nearing ATH. U.S. mining costs are ~$43K per BTC, so hashrate likely stable unless prices dip below this.
• Whale Accumulation: Significant BTC inflows into custody…
— Ki Young Ju (@ki_young_ju) August 6, 2024
Overall, while Bitcoin shows resilience through whale accumulation and hashrate recovery, macro risks and bearish indicators highlight potential challenges ahead.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any service.
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Image Source: Photo by André François McKenzie on Unsplash // Image Effects by Colorcinch