After a period of high volatility, Bitcoin is showing early signs of selling exhaustion. In-depth analysis of on-chain data and traders' psychology indicates the market might be gearing up for a major reversal.
The recent political backlash has triggered a violent correction in the cryptocurrency market, with nearly one billion dollars in liquidations. Although Bitcoin dropped by about 10% to $100,421, it quickly bounced back, regaining almost half of its losses in less than three days.
According to CryptoQuant data, early signs of a turnaround are beginning to emerge. Bitcoin’s Realized Cap has notably reached a new all-time high of $935.10 billion, indicating that many investors are continuing to accumulate bitcoins at higher prices rather than panicking and selling.
Other on-chain metrics also support the notion of a potential market support, hinting at a possible rebound. Analyst Axel adds that investors have switched to “HODL mode” as BTC spot exchanges on CEXs hit a low not seen since October 2020.
The investor fear and greed index vividly illustrates market emotional fluctuations. Following recent events, this index first dropped into the fear zone before bouncing back into the greed zone. This could be a sign of an upcoming accumulation phase, where new investors enter the market driven by FOMO (Fear Of Missing Out).
Moreover, the number of new Bitcoin addresses has shown a positive trend in recent days, indicating that new buyers are also beginning to feel the urge not to miss the next market move.
Combined, technical signals and trader psychology point to a solid macroeconomic bottom for Bitcoin. With the current price around $105,000, the leading cryptocurrency seems poised to rally towards new highs.
In conclusion, despite recent turbulence, Bitcoin shows early signs of selling exhaustion and market reversal. On-chain data, along with investor sentiment, converge towards the emergence of a decisive bottom for the primary cryptocurrency.
With a current price of $105,000, Bitcoin now seems positioned on a launching pad ready to propel it to new highs. The weekly close above $104,800 confirms that the upward trend is still intact for Bitcoin.
Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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