Bitcoin remains range-bound following its brief upward rally, despite record accumulation and supply shock. Per analysts, increased on-chain transactions reflect the same pattern as in late 2020, suggesting rising potential for a bullish breakout in the coming weeks.
The Fundamental Look
Bitcoin prices slipped back under $48,000 amidst growing concerns related to the latest regulatory developments. As China continues to maintain absolute pressure on cryptocurrencies and the U.S. Securities and Exchange Commission decides upon the future of bitcoin-focused exchange-traded funds (ETFs), investor sentiment continues to fluctuate.
Per Glassnode’s weekly on-chain report, Bitcoin network transaction fees have declined considerably, returning to levels not seen in the last year. Bitcoin’s on-chain activity at the moment indicates that regardless of the recent dip in prices, existing holders of massive amounts of BTC are continuing to buy.
According to the latest data from data analytics firm Chainalysis, whales bought upwards of $10 billion worth of Bitcoin between June and August. A similar accumulation occurred during Bitcoin’s run-up to its all-time high of $64,000 during mid-April 2021.
Meanwhile, Bitcoin mining difficulty is expected to undergo an adjustment on September 7th, which would raise the difficulty to 19.87 T, nearly 12.78% higher than its mid-July all-time low of around 13.67 T. At the same time, the Bitcoin network’s hashrate continues to make a V-shaped recovery, reaching a 7-day moving average of 130EH/s – a new all-time high since June 2021.
In adoption news, El Salvador’s Legislative Assembly continues to advance its plans to integrate the use of bitcoin, following the passage of a bill creating a $150 million Bitcoin Trust. Also contained in the legislation are provisions for the rollout of the critical infrastructure needed to support crypto accessibility, like the government’s plans to install 200 bitcoin ATMs across the country to ease crypto adoption.
In other news, Genesis Digital Assets, a U.S.-based bitcoin mining company, continues to expand its mining presence as it accumulates more machines. The company has just closed a new deal with Chinese mining company Canaan to purchase 20,000 mining rigs.
Finally, the U.S.-based arm of cryptocurrency exchange FTX has struck a private deal to buy crypto derivatives platform LedgerX for unknown terms. The move will help expand FTX’s existing spot trading services while bolstering bitcoin options and futures contracts support for retail and institutional investors.
Whales Of The The Week
- August 26: 22,905.000 BTC moved from multiple wallet addresses to Binance
- August 26: 22,885.169 BTC moved from Binance to Huobi
- August 27: 3,726.566 BTC moved from multiple addresses to an unknown wallet
- August 28: 3,708.073 BTC moved from multiple addresses to an unknown wallet
- August 30: 5,672.306 BTC moved from multiple wallet addresses to an unknown wallet
- August 31: 7,125.035 BTC moved from multiple addresses to Xapo
- September 1: 5,241.811 BTC moved from multiple addresses to an unknown wallet
The Technical Take
Following an attempt to retake the $50,000 level the prior week, Bitcoin prices continue to consolidate within an increasingly narrow range that corresponds with falling trading volumes, potentially setting the BTC-USD pair up for a directional breakout. Although Bitcoin managed to notch a modest 1.59% gain over the week, a serious decoupling of the correlation between major coins saw ETH-USD surge 13.57% over the same period, trailed by a 9.52% jump in ADA-USD.
The triangle pattern forming in the BTC-USD pair comes when the short-term trend is sideways against the backdrop of a more medium-term upward trend. Any close of a 4-hour candle above the upper or lower bounds of the triangle consolidation accompanied by a spike in volume could represent a breakout directional move. However, a move that tests these levels without higher volumes could indicate a false breakout and precede a resumption of the ongoing sideways trend. Moreover, should the Relative Strength Index fall below the 30-mark, it is worth watching for a renewed burst of buying momentum, mirroring other recent breakout moves higher in the last two months.
Given the ongoing price consolidation, the critical level worth watching on the downside in the BTC-USD pair is support at the 200-day moving average of $46,000. Any serious decline below this level and secondary support sitting at $44,600 could send prices tumbling towards the 50-day moving average at $42,000. On the upside, $48,450 and $49,900 are the key hurdles for any renewed test of the $50,000 level, with any breakout likely to encounter pressure at $51,300.
Disclosure: At the time of publication, Reuben Jackson did not have a position in any of the securities mentioned in this article.
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