Bitcoin (BTC) faced a serious downturn this week, shedding more positions from above $9,500. Now, the leading coin is fighting for key support levels, in case it breaks down closer to the low $8,000s.
Bitcoin Address Data Suggest Strong Support Levels
But before that, based on wallets acquired at various price levels, bitcoin must break several quite strong support levels. Analysis for wallets in the money and out of it shows BTC has a high chance of bouncing from the $8,100 as a local low to the recent downturn.
Bitcoin bounced on Friday, moving to $8,659.07 after dipping twice to the $8,500 tier. At these price levels, the accounts in the money and out of the money are pretty well balanced. The latest IntoTheBlock report shows that bitcoin may put up a serious fight around the $8,600 to $8,900 level, where 873,000 addresses are holding onto 643,000 BTC.
If that level breaks through, there are other signs of possible support levels between $8,100 and $8,300. At that area, defence may come from an even larger group of 810,000 holders, who bought 593,000 BTC at this price point.
Addresses out of the money, if they decide to liquidate, may pose resistance at above $9,150. But overall, the robust number of addresses in the money may lead to “hodling” behavior, giving bitcoin more resilience.
Short-Term Sentiment May Cause Additional Volatility
Physical BTC ownership may not affect futures markets, which follow their own logic. However, overall interest in bitcoin ownership and a potential halving rally are still in the books. Now, BTC is seeking temporary lows, with most predictions envisioning a bounce soon.
More pessimistic scenarios allow for a dump under $7,000 in case of panic, with an unpredictable low. But based on wallet analysis, there are plenty of support levels with large-scale holdings acquired between $7,000 and $8,000 as well.
In the short term, however, sentiment may depend on fear, as well as futures trading based on a different set of support and resistance levels.
— Crypto Gizmo – Automatic Precision TA Charts (@drama_kevin) February 28, 2020
Bitcoin also reacts to short-term panic. As the stock markets dropped, so BTC traders have returned to Tether (USDT) positions. For now, the leading crypto has not exhibited safe-haven behavior to counteract the sell-off on the stock markets. But the recent dip also followed a golden cross of on the daily moving averages, potentially signalling an upward move, after a period of short-term panic.
What do you think about the latest wallet-based indicator for BTC support levels? Share your thoughts in the comments section below!
Images via Shutterstock, Twitter @drama_kevin