Bitcoin has been in a raging market as it started the previous week trading $32,500 but declined to as low as $28,800 on Tuesday, testing a significant support level but immediately retracing to trade at $34,520 at the time of writing this report.
The dip to the support level represents the first time Bitcoin’s Year-to-Date (YTD) price performance turned negative as the coin started the year at $29,000.
Despite Bitcoin testing the critical support zone, it closed the week with a green candle as the current price of Bitcoin represents a 6.22% gain for the week.
The cryptocurrency market capitalization moved similarly as Bitcoin as it started the previous week with a capitalization of $1.38 trillion and then declined sharply on Tuesday to put the capitalization at $1.15 trillion. The market has, however, been in recovery since Tuesday and as of now, the market capitalization has almost fully regained the loss it took during the week, as it is marginally down from the previous week by 0.28%, currently trading at $1.37 trillion as of the time of writing this report.
On-chain Analysis
Willy Woo, an on-chain analytics expert stated in his newsletter that accumulation from long-term whales (a term used to describe big-money investors such as High Network Individuals (HNI’s) and institutional investors) and experienced market participants have continued. He used the illiquid supply change metric to point out that there is still a trend of strong accumulation from entities that statistically have a very low likelihood of selling.
Another indicator Willy Woo used is the Bitcoin Liquid Supply Ratio (LSR), which is a metric to check the scarcity or liquidity of Bitcoin. He stated that the LSR indicates a clear bullish divergence (when an oscillator makes a higher low, but the price makes a lower low) in the ratio. The last time a bullish divergence was this clear in the ratio was during the recovery from the correction in late January, earlier this year. This supports the idea of the re-accumulation of the flagship cryptocurrency.
He stated, “the trend of strong hands buying is increasing as the price is decreasing.”
What to look out for this week
Willy Woo mentioned many other on-chain analytic indicators to support his theory about the market still being in a bull run. Considering his analysis, investors need to watch the $36,000 trading zone as it is a strong resistance zone the market has been trying to break through. A break above this zone could mean the market will once again test the $40,000 trading zone but if the market does not succeed to break the $36,000 zone, then a larger sell-off could be at play.