Key facts:
The price increase of the last few days could be temporary.
In the medium and long term, bullish expectations remain in place for Bitcoin.
The price of Bitcoin (BTC) has been in a sideways range for more than 5 months, when it reached its all-time high (ATH) of $73,700. While bullish expectations are still in place, some indicators suggest that its price could “explode in any direction.”
As CriptoNoticias has reported, September historically It is usually a difficult month for financial markets.including BTC and cryptocurrencies, due to seasonal issues. In the northern hemisphere, summer is ending, and it is common for economic activities to slow down due to the holidays.
However, some events could act as a catalyst for the digital currency created by Satoshi Nakamoto to enter a bullish cycle.
In its most recent weekly newsletter, Glassnode, a data analytics firm on-chain, highlights that “the market is entering a low-risk zone in relation to the data of the last 90 days” and warns:
“Such a structure can be susceptible to external forces and could potentially burst on either side if the tide turns.”
Glassnode, on-chain analytics company.
To reach this conclusion, the firm’s specialists point out that, although there is still a large volume of transactions on the network, the rate at which they are processed is declining“The reduction in activity suggests a cooling in network adoption and usage, which is a negative sign in terms of the network’s health and dynamism,” says Glassnode.
In the following graph The volume of transfers on the Bitcoin network since January 2020 is observedThe pink line shows the 30-day moving average of the adjusted trading volume (30D-MA), which allows to analyse the evolution and trading performance of different assets. It is based on past data to provide an average value.
The shaded area indicates the adjusted total transfer volume, with darker shades indicating higher volumes. Meanwhile, the momentum indicator signals that The volume of transfers is losing strength.
Precisely, this decrease in momentum coincides with the fall in the price of BTC, represented by the black line.
Lack of appetite for speculation
Glassnode’s report also focuses on the activity reported by centralized exchanges. “If we perform a similar 30-day and 365-day momentum cross for FX-related inflows and outflows, we can see that the average monthly volume has fallen well below the annual volume,” it notes.
The following chart analyzes the volumes on the exchanges, to get an overview of investor activity and gauge their appetite for speculationAs can be seen in the pink bar, in the last 30 days there is a low volume of buying and selling of the digital currency compared to the last year.
The analysis suggests that lower speculative activity creates downward pressure on the price of bitcoin (grey line).
Another metric in which it can be observed that Investors’ selling pressure has increased over the past 90 days is the cumulative volume delta (CVD) indicator. It is used to track the difference between buying and selling volumes over time on various exchanges, in order to measure bullish or bearish pressures in the market.
“Over the past 90 days, there has been an increase in selling pressure, which has contributed to a fall in the asset price, reflecting a downward trend in its price action,” the report said.
In the chart below, the orange line indicates that when the CVD rises, the price of BTC (black line) tends to rise. The red line, meanwhile, represents the normalized cumulative sum of 90 days, on a maximum and minimum scale, ranging from +1 to -1.
As you can see, a positive value indicates buying accumulation, while a negative value reflects stronger selling pressure.
Using all the indicators, Glassnode created a sentiment heat map in relation to values between 1 and -1. Values above 1 suggest high risk, values 0 moderate risk, and -1 low risk. “All three indicators suggest that the market is entering a low-risk zone relative to the data from the last 90 days,” the firm’s specialists explained.
In this regard, it is clarified that “the confluence between the analyzed spot indicators can translate into a decrease in sales volume while the price action is slowly reduced.”
That’s why the report concludes that the BTC price could explode for either direction if some major event occurs such as, for example, a rate cut by the US Federal Reserve (Fed), the outcome of elections in that country or geopolitical eventsas happened in the recent crash market called “Black Monday”.
Weak performance of ETFs
Finally, the Glassnode report also mentions the poor performance of US exchange-traded funds (ETFs) based on BTC and ether (ETH) in the past month, the native cryptocurrency of the Ethereum network.
The firm defines them as “an accessible access point for exposure to the two main digital currencies” for institutional investors.
As for Bitcoin ETFs, inflows have dropped considerably since August. However, it is worth clarifying that since their launch, they have accumulated revenues of more than 17 billion dollars.
The poor performance of the 12 financial instruments generated downward pressure on the digital currency price.
ETH-based funds, meanwhile, have seen over $13 million in outflows since they went public in late July. “This highlights a disparity in the magnitude of demand between BTC and ETH, at least in the context of current market conditions,” Glassnode explains.
The report says the poor performance of these financial products indicates that the institutional landscape reflects a lack of interest on the part of investors in speculation.
