- August 24, 2022
5 factors that keep the BTC price down and will continue to knock it down
In general, the demand for bitcoin is low, despite recent rises.
Glassnode sees bitcoin in a consolidation phase of its floor.
The price of bitcoin (BTC) failed in its attempt to consolidate and take a bullish course again. And at the moment, a reversal of that behavior might not be close, according to a recent analysis by the firm Glassnode.
In its latest bulletin on market indicators, Glassnode points to several factors that have allowed the upward price movement to be stopped in its tracks, returning BTC to the $20-21,000 zone.
Among those factors, analysts highlight that the current market structure is very similar to that of the bear market that developed between the years 2018 and 2019. At that time, there was a movement of up to 140 days below the “realized price”, which is the average between the prices at which each BTC was purchased. On this occasion, the cryptocurrency lasted 36 days below that level, but now it has fallen back below that mark.
On the other hand, the report points to the arrival of a phase of distribution and weakness of demand among bitcoin accumulators which added selling pressure on the exchanges.
Analysts also identified that there was a drop in demand for new addresses on the Bitcoin network. The flow of new directions remains below the annual average, the report notes, which could “be considered as a validation of low demand in the market«.
Nor do the miners’ earnings from commissions on transactions look very strong. But despite that, this metric that serves as an indicator to measure the demand for space in the blocks of the network and, consequently, the network in general, has been rising recently.
The rise to $24,000 did not increase demand
Bitcoin had a recent move that looked promising: it resumed its level above the 200-week moving average after weeks of being below, it reached $25,000 and seemed to be looking to gain a foothold in the $24,000 zone. All that was quickly erased with a new drop to $21,000.
One of the reasons, in addition to those previously exposed, could be one that Glassnode qualifies as “curious”. And that movement did not generate a change in trend in the demand for transactions from retailers, which was already low.
“This pattern adds further confirmation of the underlying weakness of this market rally,” the researchers behind this report point out. As we reported this Tuesday in Criptonews, even Google searches show a drop in general interest towards bitcoin.
Finally, Glassnode argues that everything indicates that bitcoin is in a phase of consolidation of the fund. That is, the market is still looking for a floor for the bitcoin price, as short-term investors are looking to sell near their respective buy zones, at least to get out of their positions without losses.