- Technical indicators, including moving averages, profit and loss index, and momentum, suggest a potential bear market for Bitcoin ($BTC).
- While retail investors feel selling pressure, large investors are accumulating $BTC in hopes of a soon rebound.
- Despite its recent struggles, $BTC has outperformed gold and major stock indices in 2024.
$BTC stands in a precarious position, potentially heading for a bear market as it struggles to break above $60K. Meanwhile, whales are hoarding the token as smaller traders liquidate their holdings to offset losses.
Can $BTC withstand headwinds and hedge investors against a broader market downturn? Let’s unpack this.
The End of $BTC Bull Run?
$BTC is now trading at $57.9K, down 0.67% in 24 hours and 8.63% last week. After dropping to $49.8K on August 5, $BTC had been hovering below $60K for weeks, failing to break the $64K resistance line.
CryptoQuant data suggests a major price correction or a bear market is imminent as $BTC’s profit and loss index is fluctuating near the 365-day moving average.
Charts reveal that the $BTC price dropped significantly after the profit and loss index crossed below its 365-day moving average in May and November 2021. On each occasion, $BTC lost approximately 40% of its value.
$BTC’s negative momentum value indicates a strong downward pressure, strengthened by the substantial decrease in the Moving Average Convergence Divergence (MACD) value. Besides, $USDT’s market cap decline could potentially impede or delay $BTC price growth.
On the other hand, the neutral Relative Strength Index (RSI) signals that $BTC’s price could go in either direction as it’s neither overbought nor oversold.
$BTC’s Tug-of-War: Fear vs Greed
Worrying technical indicators put significant selling pressure on $BTC investors. The Fear & Greed Index, capturing broader market sentiment, currently sits at 26, bordering Extreme Fear.
In contrast, large investors see the drop in price of $BTC as a buying opportunity. The number of wallets holding over 100 $BTC, worth at least $5.9M, reached 16,120, hitting a 17-month high.
‘Sharks,’ wallets holding at least 10 $BTC, have also been active lately. Santinent reports that sharks and whales have collectively accumulated over 133 $BTC in August, worth $7.6B.
Adam Back at Blockstream also points out $BTC whales’ buying spree.
Increased whale activity has historically been a positive sign for $BTC. In 2020, it helped $BTC hit a new all-time high (ATH) of $27K.
$BTC Outperforms Gold
Despite the 20% drop from its ATH of $73.7K, $BTC still outperforms gold, which appreciated 23% this year.
Central banks worldwide have been investing in gold at record levels throughout 2024. Kobeissi Letter notes global net gold purchases hit 483 tonnes in Q2 2024, a 5% increase from the previous record of 460 tonnes in Q2 2023. In Q3 2024, central banks bought another 183 tonnes of gold.
While this buying pressure drives gold value, $BTC tops the valuable commodity with a 37% year-to-date increase. Major stock indices like S&P also fall behind with an 18% yearly appreciation.
US Elections As a Catalyst for $BTC Growth
As analysts speculate on $BTC’s ability to withstand the bear pressure, the upcoming US elections could catalyze its rebound to former ATH.
$BTC has historically experienced significant growth post-election, reaching its peak approximately a year later. To illustrate, in November 2016, $BTC stood at $703; in December 2017, it was trading at $20K.
Just over two months remain until the US citizens will nominate their next President. Some crypto enthusiasts believe Trump’s victory would be a better outcome for the industry given Harris’ uncertain stance on regulation, yet Polymarket shows the candidates’ odds are even.
Technical indicators paint a bleak picture for $BTC, yet whales are accumulating Bitcoin at a record rate, viewing the current dip as a buying opportunity.
Are whales right in anticipating $BTC’s rebound, and will the US election fuel $BTC price action? We’ll have to wait and see.
References
Disclaimer: The opinions expressed in this article do not constitute financial advice. We encourage readers to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
