- January was a bearish month the year after the halving
- Expectations of $180,000 later this cycle are realistically possible
Bitcoin [BTC] has had a hard time over the past two months, but this is not unusual. The psychological level of $100,000 was not an easy nut to crack. And even when it looked like the bulls would eventually use the support, the sellers found a way to send the price plummeting.
Source: X
According to one message on X (formerly Twitter), the BTC price drop in January, the year after the halving, was usually the norm. If the previous pattern holds, Bitcoin could trade around $130,000 in March.
In addition to historical price action data, the flow of BTC into and out of centralized exchanges also provides valuable insight into the behavior of market participants. Short-term holders recently showed a distribution phase, but their selling pressure will decrease. This could increase BTC’s chances of recovery on the charts.
Price action and net flow trends in the stock market show that bullishness is ahead for Bitcoin
The 30-day moving average of Bitcoin inflows to exchanges has fallen dramatically since hitting a local high in early December. This decline brought the 30 DMA to the October-June 2024 lows.
In June, BTC traded near the local low of $60,000 amid the descending channel formation. In October, it broke this channel but was still stopped by the USD 70,000 resistance. The drop in inflows while BTC consolidated below $100,000 was therefore a strong bullish sight.
The net flows, which were the difference between inflows and outflows, also showed a southerly trend. Again, the 30 DMA has been mostly negative since March 2024, with a brief period of positive flows in the second week of May.
Comparing the flows of recent months with recent cycles, such a sustained period of negative net flows (or outflows) has never happened before. In 2020, net flows were negative from the end of August to the last week of November. However, the outflows of the past eleven months exceeded the quarterly outflows of the previous run by a significant margin.
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Therefore, it seems reasonable to conclude that Bitcoin is much more bullish this time around.
While this may not lead to equally dramatic price gains, it seems highly likely that long-term holders would panic less intensely and in smaller numbers if a dramatic pullback does occur. This could limit the volatility and deep declines that traditionally accompany a BTC bull run.