There are a number of things that have been apparent to the Bitcoin market over the past week. The trading volume in the market has dried up and volatility is decreasing. On-chain metrics also smooth the curve. Therefore, at the time of writing, it is difficult to gauge Bitcoin’s short-term changes in response.
However, some indicators seem to suggest that a change is imminent, even though the price chart is not moving much right now.
The liquidity supply rate rose and The liveliness of the coin decreases
Liquidity supply ratio | Source: Glassnode
Bitcoin’s accumulation has been explained by various metrics over the past few months, but one qualitative way to understand the supply is the flow to the ratio of the liquidity supply. If one looks at the change in the illiquid supply, it can be seen that the index has risen since the end of June at the time of going to press, so that a supply shock is still possible.
Another important indicator that can be used for a more comprehensive trend analysis is coin liveliness. Coin’s liveliness is basically the ratio between the number of days a coin is destroyed and the number of days a coin is created.
Coin vibrancy customized by entity against Bitcoin price | Source: Glassnode
According to the graph above, the downtrend appears to be heading towards an accumulation phase (A) for Bitcoin and has resulted in a number of rallies in the past. However, it is important to note that the accumulation can last for a long period of time and during this time the price can decrease.
On the other hand, Bitcoin’s UTXO (Unspent Output) distribution between $ 31,000 and $ 35,000 is an important signal. According to the data, 9.94% of BTC’s money supply moves between the above range and up to 17.55% for the $ 31,000 to $ 40,000 range.
Such a high degree of movement by the company in an extreme price range allows the asset to consolidate between those particular price points. Thus, it opens the door to the idea that the bottom of BTC could be in it. Even a drop in BTC price below $ 30,000 at the time of going to press doesn’t necessarily invalidate this possibility.
Bitcoin’s red flag prospect?
BTC / USDT | Source: TradingView
With a weekly market analysis, the charts don’t look very bullish. Bitcoin has closed its lowest candle since December 2020. BTC falls under its main weekly support. Below $ 31,500 to $ 30,000, the asset lacks solid price support and could theoretically fall to $ 24,000.
However, it can be assumed that the price will recover, as most on-chain indicators cannot incorrectly predict the upward movement at the same time. It just depends on when and how it works.
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