Key facts:
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It seems prudent to have moderate expectations for Bitcoin in the short term.
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In the medium and long term, the trend remains bullish.
Bitcoin (BTC) has entered what is historically the worst month of the year. As CriptoNoticias reported this Sunday, September is usually a bad monthnot only for BTC but for most financial assets.
In the following graph, taken From the CoinGlass platform, you can see how the historical performance of BTC has been each month, since 2013. It is evident that There were only 3 green Septembers (i.e. with positive return for bitcoin) against 8 red septembers (i.e. with negative returns).
Bitcoin monthly returns since 2013. Source: Coinglass.
Will the rule be fulfilled in 2024 and will September be a bad month for bitcoinOr could this time be different? Some charts, provided by the CrytpoQuant platform, allow us to draw conclusions.
There is low activity on the bitcoin network
First of all, it can be seen that the active addresses on the Bitcoin network reached new lows in 2024.
Active Bitcoin addresses. Source: CryptoQuant.
The investor, who identifies himself on social media and Internet forums as “G aah,” comments that “a decrease in active addresses indicates less overall activity on the Bitcoin network, meaning that fewer transactions are taking place.” This is a sign that there is low interest in using the Bitcoin network at the moment. The trader adds:
«This sense of disinterest could have a negative influence on the price of bitcoin, coinciding with indicators of low trading volume. Less activity on the network generally means lower volatility, which can lead to periods of price stability.»
Ah, trader.
“Frustrating moves” are likely to continue in 2024
Another metric that allows you to anticipate bitcoin movements is the SOPR (Spent Output Profit Ratio). This is an indicator used in BTC on-chain analysis to evaluate whether the coins moving on the network are being sold at a profit or a loss. It is calculated by comparing the fiat value (in dollars, for example) when a UTXO (Unspent Transaction Output) was created, with the fiat value when that UTXO is spent. A SOPR value greater than 1 indicates that the coins are being sold at a profit, while a value less than 1 suggests that they are being sold at a loss.
SOPR is useful for understanding market sentiment. In bull markets, SOPR tends to be above 1, reflecting that investors are selling at a profit, while in bear markets, it can fall below 1, signaling that investors are selling at a loss, which may reflect panic.
It is then observed that A “death cross” has formed between SOPR moving averages:
SOPR moving averages. Source: CryptoQuant.
In this regard, the trader known as Crypto Dan Cryptocurrency-market-expected-to-show-frustrating-movements-for-the-time-being?utm_source=twitter&utm_medium=sns&utm_campaign=quicktake&utm_content=crypto-dan” target=”_blank” rel=”noreferrer noopener”>comment that “currently, the cryptocurrency market has cooled significantly due to sideways movements and long-term adjustments, but has shown poor movements, failing to break through to the upside five times since March.”
Crypto Dan adds that “with the expected US interest rate cut on September 18, a short-term rally can be expected due to positive market sentiment, but if the market atmosphere does not reverse significantly, frustrating movements are very likely to continue into 2024.”
For Crypto Dan, the situation is frustrating but necessary:
“It is regrettable that the frustrating situation continues, but it seems necessary to wait until 2025 with a long breath and patience.”
Crypto Dan, trader.
Liquidity is coming to the market
Thirdly, and to give some relief to investors, a metric is presented that provides data that can be interpreted in a positive way. And that is that Liquidity is coming to the bitcoin market and the cryptocurrencies.
The following graph sample that the market capitalization of the main stablecoin, USDT (in its 30-day moving average) has remained since April in the area close to its historical highs:
USDT market cap. Source: CryptoQuant.
Brazilian analyst Caue Oliveira explains:
This type of capitalization increase reflects a greater allocation of external capital within the cryptocurrency market, since in order to issue new USDT, it is necessary to collateralize goods and assets from the traditional market.
Caue Oliveira, market analyst.
However, Oliveira calls for calm among investors, explaining that “this does not necessarily happen immediately.” He also points out that “This firepower could hit the market at any time”.
The analyst adds that “it is possible that institutional investors are buying digital assets (…) with algorithms to reduce the impact on the short-term price.”
There is a similar pattern to that of 2019
Lastly, CryptoQuant sample that There is a stagnation in the price of bitcoin and that investors are showing a similar pattern to that which occurred in 2019.
The author who operates CryptoQuant metrics under the pseudonym “avocado_onchain” explains that BTC movement has been stagnant for a while due to a Increase in over-the-counter (OTC) tradingwhich reduces price volatility.
To understand investor behavior, market capitalization is analyzed by UTXO lifetime (unspent transaction outputs). Investors with UTXOs less than six months old are considered new. Currently, there is a slight increase in these UTXOs, similar to what happened in 2019, suggesting that new investors entered when bitcoin was at its peak in March. Many of them have either exited the market or held their investments, exceeding six months.
Bitcoin investors show a similar pattern to 2019. Source: CryptoQuant.
As seen in the chart above, something similar happened before the 2019 rally, with bitcoin taking over a year to reach a new high. Since the price remains stagnant and there is no clear trigger, “avocado_onchain” suggests have moderate short-term expectationsalthough the long-term trend remains bullish.
Disclaimer: The views and opinions expressed in this article belong to the author and do not necessarily reflect those of CriptoNoticias. The author’s opinion is for informational purposes only and does not constitute investment advice or financial advice under any circumstances.
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