- Bitcoin could be on the cusp of a rally, as the coin’s price approaches its three-month average buy price from short-term holders.
- According to CryptoQuant, this level is a reliable trend indicator – where failure to break through the average buy price often results in downward movement.
- With the Feds cutting interest rates and sell orders leaving the market, sentiment for Bitcoin and crypto as a whole is steadily becoming more bullish.
Bitcoin has enjoyed its first breakout in almost a month, pushing past the US $62k (AU $91k) ceiling after the US Feds cut interest rates by 50 bps. The weekly 8% gains have re-sparked positive sentiment across the market, with CoinMarketCap’s Fear & Greed Index moving back into the “Neutral” range.
According to analysts CryptoQuant, the short-term rally may be an omen of good things to come, based on a couple of important metrics.
Related: Bitcoin A “Unique Diversifier” According to Nine-Page BlackRock White Paper
Bitcoin Poised to Break 3-Month Average Buy Price from Short-Term Holders
In a recent post from CryptoQuant, the analysts state that the “average buy price of Bitcoin holders who have held for 1-3 months has consistently acted as a critical support and resistance level.”
These short-term holders have significant sway in the market, as they are typically looking for arbitrage or profit opportunities based on Bitcoin’s monthly price movements.
So when Bitcoin’s price moves above the average buy price of active traders, CryptoQuant argues this can signal an impending breakout.
The flipside is also true – if Bitcoin fails to break through the average buy price, it can result in hefty losses.
Institutions Moving Away from Negative Bitcoin Derivatives, Short Orders Fall in Volume by 75%
Assessing CryptoQuant’s graph, we can see that the average buy price of Bitcoin over the past few months by short-term holders sits around the US $62-63k range.
This price point is exactly where Bitcoin lies at the time of writing this article, after facing some resistance at US $63k (AU $92.5k).
Simply put, if Bitcoin can eventually burst through this ceiling, the market could be on the cusp of a bullish run to the end of 2024. On the flipside, a failure might signal a drawback as we move into 2025.
Data is pointing to sell orders for Bitcoin melting away across institutions, yet another bullish signal pointing toward a medium-term rally.
While a new BTC all-time high may still be some time away, the signs are looking more positive after a few months of sideways movement.
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