Bitcoin : The Positive Market Reset
The flash crash on August 24 was more significant than April’s, with strong liquidation of long positions. This has effectively reset the market, reducing speculative excess and offering a more solid foundation for Bitcoin.
On-chain data shows that pain is primarily being felt by new Bitcoin investors. However, holders of 1 to 6 months remain profitable, showing resilience in the face of market turbulence.
This market cleansing can be considered a positive reset where weak hands give way to stronger holders, reducing excess supply and strengthening the support.
Monitoring Key Support Levels
BTC is holding just above $108,000, corresponding to the average cost basis for holders of 1 to 3 months. This is a key level to watch, as maintaining it could stabilize market sentiment.
As Bitcoin attempts to stabilize around $110,000, monitoring key support levels is essential for anticipating any deeper correction. Losing this level could open the door to more significant and prolonged corrections.
It’s crucial to understand that this current pullback can be viewed as a simple market cleansing rather than a total collapse. The next STH support sits at $103,000, then between $95,000 and $93,000.
Is the Bottom Closer Than Ever?
The STH SOPR remains negative, confirming this capitulation. However, there’s still room for additional decline. Nevertheless, this primarily indicates that the bottom is closer than ever. This reinforces the potential for a bounce around $103,000 if Bitcoin’s correction continues.
Finally, the Seller Exhaustion Constant is a Bitcoin on-chain metric that identifies periods of seller exhaustion, signaling potential market bottoms. It’s calculated by multiplying the percentage of supply in profit by 30-day volatility. A low value indicates low volatility and heavy losses, often followed by a market rebound.
On the chart, we can observe a divergence between LTH and STH. The reset and transfer from strong to weak hands is therefore taking place. The probabilities of a correction deeper than $103,000 are diminishing. The support at $108,000 will therefore be crucial for the coming weeks.
On the same topic:
