The price trend of Bitcoin has recently attracted much attention, gradually erasing some of the gains from the past few weeks. As of now, Bitcoin has fallen 7.6% from the historical high of $99,645 reached two weeks ago, with the current trading price at $92,476, down about 4.6%.
Market signals in a downtrend
During the continuous pullback of Bitcoin prices, CryptoQuant's BaroVirtual recently analyzed that the Bitcoin reserves across major cryptocurrency exchanges are showing a steady decline. Analysts believe that this situation indicates the market is in a 'bull market.' By comparing with the situation from March to November 2020, when foreign exchange reserves also experienced a similar decline, a large influx of funds was welcomed in December 2020, which subsequently pushed the upward buying pressure. It can be inferred that the current decrease in foreign exchange reserves means that participants who missed the previous opportunity to accumulate coins may enter the market before the next price rise. As BaroVirtual stated, some market entities that previously did not accumulate Bitcoin sufficiently now realize that this may be the last downward adjustment before the next round of increases, hence they may enter to accumulate coins.
Market pattern with the absence of retail participants
The current market appears to be dominated by institutional investors and high-net-worth individuals, while retail traders are significantly lagging behind. Another CryptoQuant analyst, Woominkyu, pointed out that the Korean premium index (a key indicator of retail participation) is still below -0.5, indicating that retail activity has been extremely limited during this current sustained rise. Historically, before Bitcoin prices peak, the Korean premium index usually surges significantly. Woominkyu emphasized that monitoring this index helps to predict potential market tops. Notably, the absence of retail participants in this cryptocurrency rebound is quite significant, and once they enter the market, it is very likely to enhance buying pressure, driving Bitcoin prices even higher.
Overall status of the cryptocurrency market
At this moment, the cryptocurrency market is experiencing turmoil, with the global cryptocurrency market value shrinking nearly 6% in the past day, dropping to $3.34 trillion. CoinGlass data shows that in the past 24 hours, 206,491 traders have been forcibly liquidated, with the total liquidation amount in the crypto market reaching approximately $624.99 million.
The information provided in this article is for reference only and does not constitute any type of advice.
