CryptoQuant.com2023-03-29

2 Reasons Why BTC's Recent Rally Abated

Recently, the price of Bitcoin increased from ~$24K to ~$28K, but now the pace of the price rally has halted. In fact, it fell from a nine-month high of $28.8k to $26.9k in the last week. This is primarily for two reasons. The first reason is that investors who bought Bitcoin recently, in other words, short-term holders, decided to sell it and take some profit or exist the position at their realized price (average cost basis). The second reason is that investors who own a large amount of Bitcoin (called "whales" holding between 1K and 10K BTC) have been spending more of their Bitcoin than usual when the price was around $28K. As a result, their daily spending increased above 320K bitcoin, which reached 34%, a percentage of total BTC being spent, the highest since Dec ‘22. Due to this selling pressure, we are witnessing a divergence between price (increasing) and whales’ BTC holdings (falling to the lowest since early February). And finally, 6-12-month-old coins realized price (26.8K) seems to define the mid-point of the new price range BTC has reached recently. It functions as a support and resistance level when the volatility increases.