Bitcoin Supply 2021 Repeat: Price Predictions
Bitcoin has seen some rollercoaster price movements recently, struggling to firmly establish $100,000 as its new base. Despite repeated attempts to break through, Bitcoin has met significant headwinds, leading to more selling activity in the market.
Looking at current market dynamics, it seems Bitcoin’s difficulty in maintaining key price levels could weaken its position further, making it susceptible to a possible price correction.
Bitcoin Investors Are Driving The Price
It appears short-term holders (STH) are really calling the shots when it comes to Bitcoin’s recent price fluctuations. The amount of Bitcoin these investors are holding suggests the current market situation is echoing the accumulation phase we saw back in May 2021.
If we remember that period, Bitcoin experienced a large influx of supply, which made investors extra sensitive to any price dips. Therefore, if Bitcoin can’t hold its ground above $92,500, these short-term holders might start selling off their coins, which would only intensify the selling pressure.
Now, if demand stays consistent, Bitcoin could potentially carve out a new trading range above its previous all-time highs. However, if sustained buying interest doesn’t materialize, we might be looking at a more significant correction downwards.
Historically, periods after new all-time highs have often triggered panic, especially among those new to the game who bought Bitcoin near its peak. If their investments start showing losses (even on paper), it could cause them to sell, leading to a broader sell-off and increasing the likelihood of a sharp price drop.
Let’s look at the RHODL Ratio, which compares the balance between medium-term holders (6 months to 2 years) and new folks in the market (1 day to 3 months). It’s been on a downward trend lately. This suggests that short-term speculation is heating up, which is often a sign we see before market peaks. While this ratio isn’t at rock-bottom levels yet, its current trajectory is similar to patterns seen in the later stages of past bull runs.
A continued fall in the RHODL Ratio could be a red flag, signaling an upcoming correction. Looking back, when this ratio has bounced back up after hitting a low point, it’s often coincided with key turning points for Bitcoin’s price. If history repeats itself, Bitcoin might be heading into a distribution phase before it stabilizes or begins another upward climb.
BTC Price May Find It Difficult To Rally
Right now, Bitcoin’s price is in a period of consolidation, hovering between $98,212 and $95,761, and it’s looking vulnerable to a price drop. Having tested the lower support level multiple times, it indicates that Bitcoin is still at risk of testing it again. If this support level breaks, we could see increased selling pressure, potentially leading to a steeper decline.
Considering the current broader economic trends and the distribution of Bitcoin among short-term holders, Bitcoin’s price might indeed experience a correction in the near future. A dip down to $93,625 seems like a realistic possibility, and if the selling momentum picks up, Bitcoin could even fall further to $92,005. These price points could be crucial support areas that will dictate the market’s next move.
On a brighter note, if investors who are in it for the long haul continue to buy and hold, this could give Bitcoin the support it needs to push past $98,212. If Bitcoin manages to reclaim the $100,000 mark, we could see bullish momentum really take off, potentially driving the cryptocurrency towards its all-time high of $105,000.
