The price of Bitcoin is currently in an uncertain situation. After BTC broke below the one-month trading range between $29,800 and $31,500, the bulls have so far failed to retake this zone. A first attempt failed Wednesday at $29.725, a second attempt Thursday at $29.600.
On the other hand, the bears are also currently failing to push the price below the critical support at $29,000. Which direction the next move will go is, as always, pure speculation, but data can give some guidance.
Bullish signal 1: Decrease in supply of BTC on exchanges
Renowned crypto analyst Ali Martinez share an intriguing bullish chart, revealing that only 2.25 million BTC are currently held in known crypto exchange wallets. This is the lowest Bitcoin supply on trading platforms since January 2018.
The data suggests that investors and long-term holders are refraining from selling and instead opting to keep their BTC off-exchange. This “hodling” behavior indicates positive sentiment for BTC holders.
Bullish Signal 2: Lack of Bitcoin Whale Influx
CryptoQuant head of research Julio Moreno pointed to another bullish sign when he shared a chart showing a lack of large investor inflow with 1,000-10,000 BTC (aka Bitcoin whales) in the exchanges. Moreno said, “Not really seeing Bitcoin whale entries in exchanges. “
Moreover, the same trend is seen among retail investors, indicating a reluctance to deposit BTC in centralized exchanges. Commenting on the exchange deposit trades chart (7-day SMA), Moreno added, “indeed, it looks like no one wants to deposit in centralized exchanges.”
Such behavior suggests that major holders and institutions are holding onto their BTC assets, potentially anticipating future price increases.
Bearish Signal: Short Term Holder (STH) MVRV Metric
On-Chain Analyst Axel Adler Jr. addressed the short-term holder (STH) MVRV metric saying, “STH MVRV is actively declining and we could see something similar to what happened in both previous fixes.” The chart presented by Adler reveals that the STH MVRV fell either close to 0 or even below during the lows of strong Bitcoin price corrections in mid-March and mid-June.
Currently, the STH MVRV is still somewhat elevated, so a final pullback in Bitcoin price triggered by short-term selling by holders may be required for the MVRV to reset to 0.
Adler also noted that there is no substantial inflow to futures exchanges at the moment like there was in March and June. “Don’t expect a big breakout up or down,” Adler added.
Binance BTC Spot Liquidity Analysis
Analyst @52kskew shared a comprehensive analysis of BTC Binance spot liquidity, highlighting an interesting observation. Supply liquidity (bids > asks) and spot asks have fallen towards the price due to low volatility. He added, “note the difference in volume leading to the previous selloff and current volume decline and minimal decline.”
Given the supply liquidity between $29,000 and $28,500, this area could be the point for buyers to step in if BTC sees a pullback. In a bullish scenario, spot buying would occur in this zone, followed by rotation out of short positions. New longs open and price migrates to spot supply near $30,000. In a sell scenario, the price crashes on the liquidity of the spot bids and a forced sell occurs, Skew explains.
Potential impact of economic data on Bitcoin
Moreover, it is crucial to keep an eye on the macroeconomic factors that could influence the price of Bitcoin. Of particular significance is the release of the Personal Consumption Expenditure (PCE) Price Index at 8:30 a.m. EST today.
At Wednesday’s FOMC press conference, Fed Chairman Jerome Powell emphasized the importance of core inflation, which is proving sticky. Therefore, the Core PCE, in particular, needs to keep falling to ease the Fed’s inflation fears. If the 4.2% expectation for the base PCE is exceeded, a bullish reaction from Bitcoin can be expected.
As of press time, Bitcoin price stands at $29,210.
Featured image from iStock, chart from TradingView.com