Bitcoin (BTC) Price at Risk: Key Indicators Signal Drop Below $29,000
[TL; DR]
The price of Bitcoin may drop to a value that is close to $28,000.
Recently, there has been an increase in the BTC exchange reserve which indicates a bearish momentum.
Bitcoin’s Age consumed increased by around 190% in the first week of August.
Introduction
Bitcoin has been performing well during the greater part of 2023. However, it has failed to register high gains which the market has anticipated. Also, most of the time it has been fluctuating between $27,000 and $31,500. This analysis looks at the risk of BTC price falling below $29,000. We will analyze its age consumed, a key indicator that helps investors to predict the BTC price.
Read also: Bitcoin Halving: Countdown to Crypto Bull Market
The Relationship between Bitcoin Price and Exchange Inflows
The level of Bitcoin inflows and outflows enables analysts to predict its future price. Exchange outflows is a metric that indicates the quantity of a coin/token that moves out of exchanges to non-exchange wallets.
On the other hand, exchange inflows show the number of coins that have been moved from non-exchange wallets to exchange wallets. The direction in which the tokens/coins Flow can indicate the market conditions such as bearish or bullish momentums.
The flow of Bitcoin from exchanges to non-exchange or trader wallets indicates a potential bullish momentum. This is because when much BTC is moved from exchanges there will be a short-term shortage which contributes to its appreciation.
On the contrary, the movement of much Bitcoin from traders’ wallets to exchanges shows the intention to sell them. Therefore, it indicates a bearish momentum. The reason is that an increase in BTC on exchanges leads to a higher supply than before. This creates a temporary high selling pressure which forces its price to go down.
Understanding this relationship helps investors to make informed investment decisions. For instance, Bitcoin traders can easily anticipate when its price may rise or fall. The difference between BTC’s market entry and exit informs the traders if the current trend will continue or stop.
Possibility of Bitcoin Trend Reversal
During the first week of August some on-chain indicators showed a possibility of a Bitcoin price drop below $29,000, an important support level. Its gradual downward trend started around mid-July when its value fell below $31,850. Now, the long-term Bitcoin holders are bracing for a potential price reversal.
Basically, some long-term Bitcoin investors had been selling their BTC in large amounts during that period. Santiment’s Age Consumed data shows that the massive sell-off began on 31 July resulting in BTC closing the month while trading below $29,500.
As a fact, the Bitcoin’s Age consumed increased by 190% from 2.06 million on 29 July to 5.97 during the first week of August. The following graph shows changes in Bitcoin’s Age Consumed within the stated period.
Change in BTC Age Consumed Indicates a Possible Price Drop- Santiment
An increase in the Age Consumed shows that there is a movement of long term held BTC. That BTC sell-off by long term holders has prevented its price from rising above $30,000.
Exchange inflows
Another key factor that determines the price of Bitcoin is the exchange inflows. According to Cryptoquant there has been much BTC inflows to the exchanges which increased its supply. That indicates that the long-term investors may be considering selling off their BTC holdings because its price has stagnated between $29,000 and $29,500 for a long period.
As you may anticipate, this move may force the price of BTC to drop further. Statistically, between 25 July and 3 August the BTC exchange reserve increased by 8,600 coins as the next graph shows.
Increase in BTC Reserve on Crypto Exchanges - Cryptoquant
As the above diagram indicates, the BTC exchange reserve increased between the cited period. In simple terms, the exchange reserve refers to the number of coins or tokens that have been deposited in recognized crypto exchanges.
Read also: how to buy BTC on Gate.io crypto exchange
An increase in this metric indicates a strong possibility of a downward price movement. Therefore, the increase in the exchange BTC reserve indicates that its price may fall below $29,000 in the near future.
Some crypto experts have also indicated that the price of BTC may fall. For example, Rekt Capital, a crypto trader and analyst said, “BTC continues to reject at ~$29250. As long as that continues, bias favours to lower prices.”
Michaël van de Poppe, the founder and CEO of Eight, a trading firm said, “Monday coming up, usually a day that Bitcoin makes it’s standard drop. In that case, targeting $28K to bid.” As you note, he believes that the BTC price may even fall towards $28,000.
However, he added another possibility. He said, “If we do not drop to that region, then I clearly want to see a break above $29.7K to add on my longs.”
Read also: BTC Price Prediction & Forecast for 2023, 2025, 2030
Conclusion
Some key indicators show that the BTC price may fall below $29,000 in the near future. In fact, both the Age Consumed and the exchange inflows indicate a possible decrease in the price of bitcoin. Crypto experts like Michaël van de Poppe and Rekt Capital have said that there is a high possibility that the price of Bitcoin will drop below $29,000.
