Bitcoin has been a rollercoaster ride for the last two years, and at the moment the coin is on a downward trajectory. The total value of all the coins in circulation has fallen from nearly $400 billion to $200 billion in less than two years. This has happened despite the fact that the price of Bitcoin has maintained a consistent upward trend since mid-2017. This drop in price has led to a decrease in overall transaction volume, which has been the primary reason behind the fall in Bitcoin velocity.
All cryptocurrencies have been on a downward trend over the past several months, but the Bitcoin price has held steady at around $5,400, while its velocity has continued to fall. The most recent record low was reached on August 29th, when it measured at only $19.8m per day. In a traditional market, this would not be too concerning, but when the velocity is so low, it indicates the currency is not being used by any significant amount of users.In the early morning hours of July 14, the price of bitcoin unexpectedly fell to $31,550, before slowly recovering above $32,900 in the morning session.
The sharp drop near the critical resistance level of $30,000 has raised alarms among both bulls and bears, and while the $30,000 to $32,000 level continues to act as a support level, a recent market update from ByteTree CEO James Bennett paints a mixed picture of what could happen to BTC.
According to Bennett’s analysis, the price of bitcoin has stabilized near the $34,000 mark thanks to lower miner sales and increased hoarding, but he also cautions that several metrics show that the drop in online activity suggests that BTC is still in a neutral zone with less appetite from big players.
Bitcoin transactions have declined
According to Bennett, weekly bitcoin transactions have declined since April and now stand at 1.48 million transactions, after peaking at 2.57 million on April 9. January.
Number of bitcoin transactions with cumulative total for 1 week. Source: Byte tree
Due to the current slowdown in the market and a drop in the number of transactions, the total value of transactions on the Bitcoin network has dropped to $23.6 billion, the lowest level since December 2020.
Total cumulative value of bitcoin transactions during one week. Source: Byte tree
Bennett said that due to the decline in online activity :
It is unlikely that bitcoin will see any further upward price movement, perhaps even downward.
Bitcoin speed hits record high
On the eleventh. In July, bitcoin reached a historic low of 195%, well below the recent high of 593% reached on the 23rd. The month of May has arrived. Speed is a non-price measure and measures the strength of the Bitcoin network, Bennett said.
Bitcoin Network Speed. Source: Byte tree
In the second half of last year, from July to December, speeds rose and prices followed. As the price fell over the course of the year, so did the price.
Related: The CEO of BlackRock reports that cryptocurrencies have little appeal to long-term investors.
Miners finally showing signs of accumulation
The recent accumulation of mining stocks is a positive sign in the market. This number has fallen in recent months as China has tightened its measures against mining companies to the point where many have shut down operations completely and moved to other countries.
Bitcoin miners stock versus price. Source: Byte tree
Now that the stock of BTC held by miners has stabilized and begun to rise, Bennett suggests that miners are accumulating again, which could be interpreted as a signal that the price of bitcoin is about to stabilize.
Relationship between institutional dominance and the price of BTC. Source: Byte tree
The institutional dominance ratio, a measure that tracks the top fifth quintile of the bitcoin heat map, shows a decline since the 12th. July was also a month of growth. This suggests that large bitcoin holders have stepped up their activity in recent days as the bitcoin price has remained above $31,000.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Cointelegraph.com. Every investment and every transaction involves risk. So you need to do your own research before making a decision.
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