These days, the Bitcoin market is getting a break after a time of intense selling. Selling pressure means many people were quickly selling their Bitcoin for money. Now, fewer people are selling, and Bitcoin’s price has started going up again. Over the past three weeks, the price has climbed significantly.
CryptoQuant, a research company that studies Bitcoin, says if people keep holding onto their Bitcoin instead of selling, its price might continue to rise. This could lead to a “relief rally,” which is when the market starts recovering after a tough period. This improvement could also be helped by a recent decision made by the Federal Reserve, which cut interest rates by 25 basis points. The Federal Reserve is a big financial group in the United States that makes decisions about money. The FOMC (Federal Open Market Committee), a team in the Federal Reserve, is the one that decides things like interest rate changes. For more information on the Federal Reserve, visit here.
Less Bitcoin Selling
Recently, Bitcoin’s price got better. On November 21, it recovered from $80,000 to reach $94,000 a few days ago, which was its monthly high. Right now, Bitcoin is being traded around $90,000, which is 1% higher than it was last week.
Another sign of reduced selling is the decline in Bitcoin deposits made to trading platforms. A trading platform is a place where people can buy and sell Bitcoin. Learn more about trading platforms here. Around mid-November, a total of 88,000 Bitcoins were deposited daily. But now, this number has dropped to only 21,000 Bitcoins. The amount started shrinking after Bitcoin’s price reached a record high of $126,000, and big investors began transferring less Bitcoin to these platforms.
Large players, or investors who own a lot of Bitcoin, have also reduced their deposits significantly. Their share of deposits now makes up only about 21% of the total daily average deposits, compared to 47% in mid-November. Additionally, the average amount per deposit has gone down, from 1.1 BTC to 0.7 BTC.
Could Bitcoin Rise More?
This drop in selling pressure and fewer Bitcoin transfers to exchanges have happened alongside big investors and short-term holders selling their assets at a loss. Short-term holders are people who don’t keep Bitcoin for long. A month ago, Bitcoin’s price fell below $100,000, and both new and old large investors saw losses of $646 million, the highest losses since July. Since then, Bitcoin investors have recorded more losses, amounting to $3.2 billion.
Short-term holders couldn’t make a profit when selling Bitcoin over the last four weeks. Instead, they sold at a negative profit margin as low as -7%. This is explained using the Spent Output Profit Ratio (SOPR), a tool that measures if Bitcoin is being sold at a profit or a loss. For example, if SOPR is above 1, it means Bitcoin sold for more than its purchase price. Right now, it is below 1, meaning people are losing money when selling.
CryptoQuant analysts mentioned historically, when people face major losses, they stop selling, and selling pressure eases. If this trend continues, Bitcoin’s price could climb back to $99,000. This amount is seen as an important level because it’s a resistance point during difficult market conditions. Resistance means the price usually struggles to go higher than this level. They also mentioned that Bitcoin might even hit $102,000 or $112,000, as these levels are key on-year averages for Bitcoin.
Overall, things are starting to look better for Bitcoin, but its future largely depends on whether people stop selling it at a loss and continue holding on to their investments.