Bitcoin [BTC] another way back above the $90,000 mark. Buyers’ efforts over the past week saw the $90,000 level tested twice and briefly revised. To keep this uptrend going in the short term, the $94k level must be breached on the next attempt.
A recent AMBCrypto report shows that miners’ reserves have grown in recent days. It strengthened the case for a potential local bottom.
At the same time, there may be reason to expect more sideways movements in December, rather than a clear upward trend.
Reasons why Bitcoin could have found its local bottom
In one message on Xanalyst Donkerfost noted that spot trading volume on major exchanges slowed in November. Binance, which still had the largest volume share, saw a $40 billion drop in volume from October to November.
Bitcoin had lost 17.5% of its value this month, with the analyst noting that the deeper we go into the cycle, the less prominent Bitcoin spot trading activity became. The successive peaks were also noticeably smaller.
Meanwhile, futures trading activity has remained high. The spot volume was only 0.23 of the futures volume.
Moreover, the market sentiment remained in the ‘fear zone’. With global demand drying up, more and more people were talking about a bear market phase, which is still unconfirmed.
Fearful market sentiment and low trading volume usually accompany a bottoming in the local market. The unfortunate problem is that these conditions also indicate a transition into a bear market.
The Bitcoin Supply in Profit Market Bands metric has seen a rapid decline from above the psychological inflection line to below the liquidity accumulation.
Simply put, this meant that the profit offering has shown bullish market conditions until recently. Selling pressure since early October has wiped out these holders’ gains, mirroring the benchmark’s decline in June 2021.
At the time, Bitcoin was able to rise again to new highs before entering a bear market. It is possible that a similar scenario could occur again, but investors should remain cautious and prepared for a transition into a bear market.
Final thoughts
- Low spot trading volume and highly anxious market conditions could be signs that a bottom has been reached in the local market.
- Bitcoin supply in earnings stats revealed parallels to June 2021, when a BTC rally to a new all-time high began.