Recently, Bitcoin saw the worst correction in the last 24 months. The latest market adjustment has caused significant financial distress, particularly for short-term holders whose investments have experienced a steep decrease in value.
This group has suffered unrealized losses as a result of Bitcoin’s value falling more than 16.5% from a high of $63,801 on July 1 to a low of $53,499 by July 5, according to onchain statistics from Glassnode.
Deepest Correction Since Late 2022
According to analytics company Glassnode, this has been the “deepest correction since late 2022,” with the market having declined by more than 26% from its all-time high (ATH) that was established earlier in the year.
Even though this downturn is severe, it is notable that it is shallower than the corrections seen in prior cycles. This pattern suggests that Bitcoin is evolving into a more mature asset class with a stable market structure and lower volatility.
This opinion is supported by historical data, which demonstrates how the 2023–24 market cycle closely resembles the trends of earlier cycles, particularly those from 2018–21 and 2015–17.
Source: TradingView
Analysts continue to argue fiercely about how consistent these cycles are. It is still a useful tool, nonetheless, for comprehending the composition and anticipated duration of Bitcoin price fluctuations.
An overwhelming majority, or 83%, of Bitcoin held by short-term holders—addresses owning Bitcoin for fewer than 155 days—had seen unrealized losses during the most recent sell-off, according to Glassnode’s analysis.
More specifically, out of the 3.2 million BTC held by these short-term investors, 2.9 million BTC, or around $166.75 billion at current rates, fell below their purchase price. Significant downward pressure was applied to both the price of Bitcoin and the entire cryptocurrency market by this action.
Critical Resistance Levels
In the event that Bitcoin stays below $58,000, which has turned out to be a critical resistance level, this pressure is probably going to continue. Although it has some support at lower price points, Bitcoin was trading around $57,485 at the time of publishing, failing to break over this obstacle.
This story is enhanced by additional technical analysis, which highlights important obstacles to recovery. For Bitcoin bulls, the 200-day exponential moving average (EMA), which is currently around $58,180, is the first resistance level.
Furthermore, the 50-day and 100-day EMAs’ convergence at $63,880 indicates the presence of another important resistance level. Any meaningful price rebound could be thwarted by aggressive selling in these zones, as investors might choose to take profits or go for break-even.
Popular cryptocurrency analyst Daan Crypto Trades noted that reclaiming the 200-day exponential moving average (EMA) and consistently holding above $59,000 would be a positive sign for Bitcoin bulls.
This observation highlights the significant technical thresholds that Bitcoin needs to overcome to regain its upward momentum in the market.
Additionally, liquidation data from Coinglass underscores the importance of the 200-day EMA, situated at $58,587, which has been a focal point for high short bids, further asserting the critical nature of this level in Bitcoin’s recovery path.
Increased Investment in Bitcoin ETFs
One bright spot in spite of these obstacles is that more money is being invested in US-listed spot Bitcoin exchange-traded funds (ETFs). Investments in these funds have increased, suggesting that interest in Bitcoin is once again high.
According to Farside Investors, Bitcoin ETFs witnessed significant net inflows from July 5 to July 9. On July 9 alone, $216.4 million entered these funds. This amount of money is equal to about 3,760 Bitcoin.
BlackRock’s iShares Bitcoin Trust and Fidelity’s Wise Origin Bitcoin Fund, which brought in $121 million and $91 million, respectively, were two of the biggest winners from these inflows.
Bitcoin ETF Flow (US$ million) – 2024-07-08TOTAL NET FLOW: 294.8(Provisional data)IBIT: 187.2FBTC: 61.5BITB: 11ARKB: 8.4BTCO: 0EZBC: 0BRRR: 0HODL: 1.6BTCW: 0GBTC: 25.1DEFI: 0For all the data & disclaimers visit:https://t.co/4ISlrCgZdk
— Farside Investors (@FarsideUK) July 9, 2024
A total of $654 million was invested into these funds over the course of three working days, demonstrating strong institutional confidence in Bitcoin’s long-term potential.
Considering the larger market situation, these inflows are very remarkable. While some investors remain wary due to Bitcoin’s inability to maintain levels above the $60,000 threshold since early July, the substantial capital inflows into ETFs indicate optimism that may strengthen Bitcoin’s market value in the future.
The strong investment activity in ETFs offers a ray of optimism for the cryptocurrency’s valuation trajectory as it continues to navigate through resistance levels and market corrections; these patterns are comparable to those seen in the months preceding March, when Bitcoin hit its all-time high.
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