Bitcoin may have run out of steam for now and may not be returning on a sustained bull run that would see the price exceed the previous records of $64,000 or $53,000 any time soon– until after there is a major shakeout.
This is a notion held by renowned traders and analysts including Crypto Chase, who tweeted about it earlier today.
“I’m not shorting because BTC rarely obeys, but I will be buying capitulation if it’s offered optimally between $34,000 to $36,000.”
Despite opening at a $47,328 per one BTC on Monday, the price was back to a low of $39,876, signifying a sell-off and underlying market challenges for the bulls. With most technical currently flashing a mild-to-a-strong sell signal, analysts say this selling could intensify if the bears maintain the price below the 100-day SMA.
It is currently trading at $43,369 at the time of this writing. Strong resistance and a subsequent price rejection at $45,000 could lead the price testing new support at $34,600. Moreover, a loss at $28,600 could see the current corrective phase being extended further down.
That shakeout seems certain for now, given metrics and FUD. China was back at it again in the weekend, issuing new threats of blocking crypto entities from serving its citizens on mainland China even as the Chinese debt market welcomed yet another crisis in the Evergrande group. The Chinese FUD alone has caused heavy liquidations this week. In the US, the Securities and Exchange Commission has been issuing alarming threats through the chair, for at least two weeks now, but the crypto market is yet to duck.
Glassnode analysts are in agreement with that notion. According to their Monday analysis of BTC trend, the network transaction counts are at their lowest levels since May. That is around 175,000 to 200,000 transactions per day, similar to levels seen in the 2018 bear market. This definitely means that there is less relative interest in cryptocurrency, according to analysts. That case of a bear market is supported by the decreasing number of on-chain entities.
“We can see, however, that a very similar pattern is in play which speaks to the more bearish case of reduced participation being a dominant driver. This adds weight to the argument that the market may be dominated by HODLers and traders, with less participation by newer entrants and retail speculators.”
In addition to this, 58% of short-term holders who bought the crypto in August and September are underwater. This will likely increase a short-term sell pressure for BTC despite other metrics showing dominant accumulation by many actors.