Selling in Bitcoin and overall markets were severe in the last couple of weeks because of short term investors.
Due to a bull rally prior to Bitcoin Halving, and the lofty targets given by top analysts, several short term investors saw an opportunity to make some quick money.
However, by the time these investors entered the markets, the prices were already in the overbought zone. When these short term investors entered, the markets were ripe for a correction.
Geopolitical events like Israel-Iran conflict, US FED interest rates and profit booking triggered a sale in the markets.
Once selling gained momentum, the short term investors sold completely and most of them likely existed the markets. As soon as the price of Bitcoin went below the average purchase price of short term investors, the selling paused.
Bitcoin On Chain Data
A report by Glassnode shows that it is highly likely that these short term investors have exited the markets. The below image shows how short term investors with an average buying age of 1 week – 3 months have likely sold the most. The realized price for purchases done in the last 3 months were $62k.
Blockchain Lab Accurately Identified Buying Levels
This was also the support identified by us at Blockchain Lab i.e., $61.3k in the below chart. The reason why we thought the price would act as a support is due to 2 arguments.
- Bitcoin’s price would not experience any severe fall due to Bitcoin Halving and due to the presence of Bitcoin ETFs.
- Secondly, the trend lines showed that $61.3k was a very strong buying zone. This is why despite the fact that price went below this line, it immediately recovered.
Slow Price Recovery Ahead
Now that short term investors have likely exited the markets, the price of Bitcoin may jump to $66k. However, we do not expect any large rally to extend unless the resistance at $72.3k is taken out.
The presence of a huge BTC holding with Bitcoin miners could also keep prices suppressed for a while in the next few months.