After a rollercoaster performance this past week, Bitcoin has had somewhat steady price action all weekend. Given the escalating tensions in the Middle East, determining the future trajectory of the crypto market has been a bit of a challenge.
Nevertheless, the technical and on-chain structure of the leading cryptocurrency suggests that the bear market is still in full swing. In fact, the latest on-chain assessment shows that Bitcoin’s price is still vulnerable to downside volatility.
BTC Price Preparing for Another Round of Bearish Momentum?
In a new post on the X platform, on-chain analyst Boris says argued that the Bitcoin price remains within market structures that ultimately lead to downward movements. This observation is based on the rising active supply ratio for long-term holders (LTH), which indicates an increasing level of activity within the LTH supply.
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According to Boris, volatility typically arises within the supply of long-term bonds before major upward price movements occur. This phase is characterized by the strategic distribution of Bitcoin to the appropriate locations in preparation for market activity.
Boris said:
As the market rises, these coins are gradually distributed to meet demand. When demand begins to weaken, the market typically transitions into a lateral structure, allowing the distribution process to continue.
Now, the Bitcoin market tends to enter a downward movement once the distribution phase is completed and new positions are taken. For example, since this surge in LTH activity began, the price of BTC has fallen from around $95,000 to almost $60,000.
Interestingly, Bitcoin’s price decline has not reversed the upward trend in long-term holder supply, implying that a downward move is still a strong possibility. “Even if we see upward moves in the coming weeks, these will likely represent a liquidity illusion occurring within the broader distribution phase,” Boris said.
The analyst noted that while the $60,000-$62,000 range appears to be a support zone, the current market structure suggests this region could simply act as a liquidity generation zone within a redistribution phase. A liquidity generating zone (or liquidity zone) generally refers to a key technical area with a concentration of trading orders, typically stop losses and limit orders.
Boris concluded that, based on current data, downward price movements towards the end of the year appear to be the most likely scenario for Bitcoin.
Bitcoin price at a glance
At the time of writing, BTC’s price stands at around $67,628, reflecting a 1% decline in the past 24 hours.
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Featured image from iStock, chart from TradingView