- History drew attention to a related decline as volatility increased
- A larger amount of BTC is being issued, indicating a possible drop below $60,000
Bitcoin [BTC] is now at a crucial moment, with just a few hours to go before the highly anticipated fourth halving. However, according to data from IntoTheBlock, almost 10% of BTC holders are currently experiencing losses.
This increase in numbers could be linked to Bitcoin’s recent decline, which was a price drop of over $70,000 to $62,324, at the time of writing. That being said, this did not appear to be the only threat to BTC.
Can Bulls Defend BTC?
According to the said data, the price of Bitcoin could fall further and settle between $56,000 and $60,000. This can happen if profitability decreases and the number of holders at a loss exceeds 10%.
Source:
Here it is worth noting that AMBCrypto does not present this prediction without concrete reference to history. For example, in January 2021, Bitcoin’s price fell from $40,000 to $31,000 after out-of-fund holders went higher than the aforementioned ratio.
To determine this possibility, we checked the coin’s volatility using the on-chain analysis platform Santiment. At the time of writing, the one day volatility had risen to 0.016.
The higher the volatility, the higher the possible return. Furthermore, the rise in the statistic has the potential to cause significant downward movement in the charts.
However, at the time of writing, Bitcoin volatility was not as high as it was on April 14 and 16. Ergo, if the metric reaches any of these points, the coin can register huge price swings on the charts.
Source: Santiment
If selling pressure increases, a drop to $56,000 is possible. However, a rise in buying pressure could change the forecast and put BTC on a northward trajectory.
Problems in sight? Traders run for cover
In the meantime, we have noticed that the supply of Short Term Holders (STH) has increased. According to Glassnode, Bitcoin’s STH offering is jumped from 3.40 million to 3.42 million since April 14.
The measure is the total amount of circulating supply in the hands of short-term investors. If the benchmark tightens, it implies a decrease in the supply available to be spent or actively traded. Normally this indicates a bullish scenario.
However, this was not the case with BTC, as the possible implication could pose danger to the price of the crypto. Should the supply of STH stagnate, the price of the coin could remain above $62,000.
Source: Glassnode
On the other hand, an increase in supply could cause a downturn, causing the value to drop to $56,000.
However, despite the bearish bias, social dominance had increased to 30.31%. The increase could be linked to the impending halving, which many believe will change the game for BTC this cycle. On the contrary, the overall financing rate decreased, indicating that traders are slowing down their bullish bets.
Source: Santiment
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With the price falling and buyers reducing aggression, Bitcoin may not have the strength it needs to reverse the potential decline. If this remains the case when the halving takes place, a drop on the charts can be expected.