GM. Today's headlines:
- Bitcoin's price is back down below $60k after a rejection of its 200-day moving average.
- Putin signs a law legalizing Bitcoin mining in Russia.
- The CBOE re-files Bitcoin ETF Options Application.
Following a strong recovery from last week’s crash, $BTC has now pulled back from above $60,000 and is currently at $58,525.
$BTC is currently down -3.85% over the past 24 hours but is up +10.39% over the past week.
Figure 1: Bitcoin past 24-hour price performance.
News You Need to Know
- Putin signs law to legalize Bitcoin mining across Russia.
- Celsius sues Tether for $3.5B due to Bitcoin Collateral sell-off during bear market.
- CBOE (Chicago Board Options Exchange) has refiled for their Bitcoin ETF Options product.
- BitGo aims to move its Wrapped Bitcoin business to multi-jurisdictional custody.
The Big Story
Bitcoin Price Retraces After Relief Rally
Last week saw a rapid drop in the price of Bitcoin as global markets sold off.
Since then, though, Bitcoin has rallied up +25% in the space of a few days, suggesting that the crash was perhaps somewhat overblown.
$BTC reached a key resistance level, the 200-day moving average in its rally up from the recent lows.
After such a strong relief rally it is no surprise that it is now pausing below resistance.
Price has now pulled back from the 200-day moving average resistance level to $58,525.
The 200-day moving average is currently at $62,200 and is trending higher.
Figure 2: $BTC rejected off the 200DMA.
Here is the zoomed-out view of the 200DMA and Bitcoin price throughout this bull run to date:
Figure 3: $BTC typically stays above its 200DMA in bull markets.
With wider market concerns about a potential US recession, the risk of Kamala Harris’ potential anti-Bitcoin policies, and the possibility that last week’s price drop was the start of a bigger move, the general market sentiment remains uncertain.
However, it is our view that we are still early in the Bitcoin bull run and while price is currently taking a breather, it is likely to climb higher in the coming weeks.
Key Chart
Each week, our BM Pro Analysts hand-pick a must-see chart for you. This week:
+1 Year HODL Wave
Figure 4: Bitcoin +1 Year HODL Wave.
What the chart shows:
- Orange line: The percentage of bitcoins that have not moved on-chain for at least 1 year. Movement of bitcoin on-chain typically happens when someone sells their coins.
- Therefore, this indicator is a good proxy for the long-term holding of bitcoin.
- Black line: Bitcoin price.
Why this matters:
- This metric allows us to identify the sentiment and behaviour of long-term holders of Bitcoin. Defined as people who have not moved their bitcoin to sell for at least 1 year.
- By definition, these holders are more experienced than newer entrants into the market. With that experience comes knowledge of Bitcoin’s market cycles.
- Therefore a clear trend emerges with each Bitcoin market cycle where these long-term holders accumulate in bear markets (orange line is high i.e. they are not selling their coins) before they start to realize profit and sell their coins deeper in to the bull markets (orange line rapidly drops as they sell their coins).
- Therefore, tracking movements in this orange line is extremely useful, as it gives us information about what the longer-term, more experienced players in the market are doing with their bitcoin.
- History shows that they typically buy when Bitcoin is cheap and sell for significant profit deep into bull markets when price has climbed much higher.
What’s happening now:
- While the 1-year HODL wave line has slightly dropped since price made a new all-time high earlier this year, it has now stabilized.
- Given the limited downward movement in the 1-year HODL wave line so far this cycle, it does suggest that longer-term holders are waiting until $BTC reaches higher price levels before they sell their coins en masse.
- That, in turn, restricts supply in the bull market, which will have a positive impact on Bitcoin’s price over time.
Keep an eye on this chart over the coming months. If the 1-year HODL wave starts dropping significantly it could well indicate that many longer-term players are selling their bitcoin.
You can track the +1yr HODL wave chart here.
The Bitcoin Magazine Pro Team.