After a steady decline since Wednesday, Bitcoin traded flatly throughout the weekend despite recovering slightly on Saturday. In the past week, the leading cryptocurrency by market capitalization has lost over 8% of its value. At press time, BTC was trading at $27,644, up 1.27% in the past 24 hours, as per CoinMarketCap data.
Why is Bitcoin Falling?
Apart from crypto-industry-focused uncertainties that have afflicted the wider digital asset market, Bitcoin’s gradual descent can be attributed to the selling activities of miners.
On Sunday, “Tarek”, an analyst for Cryptoquant, noted that Bitcoin’s drop has brought its price closer to the cost of mining, which is currently around $27,200. This has prompted miners to offload their coins, resulting in downward pressure on the cryptocurrency’s value.
“We notice an increase in the miner outflow index and the selling index of miners, along with a decrease in miners’ reserve. All of this indicates selling pressure from miners during the past few days,” he wrote, sharing a Bitcoin Miners Position Index (MPI) chart, which has been increasing.
He, however, advised investors against panicking, noting that he expects the selling pressure to subside around $27,200-$26,600.
“Local Top” is in for Bitcoin
JA Maartum, another Cryptoquant analyst, notes the recent uptick in the activity of movement of “ancient” Bitcoin or dormant addresses could signal a “local top” for Bitcoin.
In trading, a local top refers to a point in an asset’s price chart where the price peaks before starting to decline. This peak represents a level of resistance where the price has trouble breaking through and continuing to rise. After reaching the local top, the price typically retraces, creating a short-term bearish trend.
According to Maartum, while it’s rare for dormant addresses to be moving around, considering they are still significantly profitable in dollar terms at current market prices, they occasionally re-enter circulation to take profits.
“This is a rare occurrence, and it typically happens around market tops (when the market crashes) or bottoms (when old Bitcoin capitulates, such as during the FTX crash). And it happened yesterday as well. 6,000 BTC with an age between 7 and 10 years moved. This could be a sign of a local top,” he wrote.
That said, while Bitcoin has been experiencing a minor correction, various experts expect the cryptocurrency to bounce back soon, considering that most fundamentals remain strong. According to Caleb Franzen, a senior market analyst at Cubic Analytics, Bitcoin needs to reclaim $27,820 to establish a bullish move.
In a recent post, the pundit highlighted the cryptocurrency’s 12 and 24-month Williams %R oscillators, which he noted are no longer “oversold”. According to him, this has “historically meant that the lows of the BTC bear market are in & that a new bull market is starting.”
