Bitcoin (BTC) saw a sharp decline below $90,000 yesterday, raising concerns about its near-term stability. However, the cryptocurrency has since rebounded, trading back above $96,000 at the time of writing.
This rapid recovery has caught the attention of market analysts who study the fundamental movements drive Bitcoin price movement.
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Is Bitcoin's rise above $96k a stopgap?
CryptoQuant contributor Mignolet shared an analysis highlighting recent price dynamics. According to the analysis, the recent drop in BTC to $89,000 and the current recovery was triggered by the breach of a key short-term support level.
Mignolet revealed that this pattern, known as “stop hunting,” occurs when price movements temporarily break support levels before rebounding. Despite the recovery, Mignolet emphasizes that a real revolution would have to move back stronger involvement from major market participants.
Mignolet's analysis points to significant selling activity among whale groups, as seen in Coinbase Premium Gap (CPG) data. Usually, buying whales steps in to absorb such bots, creating a certain market volatility.
However, this time, such activity was absent, raising questions about the sustainability of the ongoing rebound. Additionally, Binance's market buy ratio data indicates that large buyers on the exchange have not taken advantage of the recent price movement, indicating a sense of caution among key players.
Further evidence revealed by Mignolet comes from the daily inflows and outflows data of exchange-traded funds (ETFs), which have yet to confirm any significant changes in market dynamics.
Although the daily candlestick pattern suggests a meaningful move, the lack of participation from the whales could hinder Bitcoin's ability to sustain a long-term reversal. Mignolet also warned that market sentiment could also shift soon to hope without clear supporting data. The analyst noted:
Although the candlestick pattern indicates a meaningful move, the main players are not taking advantage of the opportunity. What worries me more is that many people's mood may quickly shift to a feeling of relief too soon.
Bitcoin market performance
After seeing a huge drop in price yesterday falling below $90,000 and prompting a total liquidation of more than $300 million in the crypto market, Bitcoin is finally seeing a noticeable turn in its bearish trend.
In particular, over the past day, Bitcoin has increased by 5.6% bringing its price to trade at $96,351, at the time of writing. However, despite this increase, the asset is still about a 10.8% decrease away from the peak above $108,000 recorded last month.
Although Mignolet's analysis suggested that Bitcoin's bearishness may not be over yet, it is worth noting that the asset's current recovery coincides with reduced selling activity from long-term holders.
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In a separate study, Darkfost contributed to CryptoQuant show up that the net position change of long-term holders (LTHs) over the past 30 days remains negative but shows signs of improvement. From a low of -827,000 BTC on December 5, the figure has risen to -246,000 BTC.
This decrease in selling pressure suggests that LTHs are less likely to sell at current price levels as the price of Bitcoin declines. However, Darkfost noted that for bullish momentum to regain strength, LTHs would need to move towards rallying rather than reducing selling.
Featured image created by DALL-E, Chart from TradingView
