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Several prominent on-chain analysts and traders have turned short-term neutral to slightly bearish on Bitcoin as BTC struggles to reclaim $33,000.
Ki Young Ju, the CEO at CryptoQuant and an on-chain analyst, says Bitcoin (BTC) is neutral to short-term bearish for the time being.
There are two major indicators that have been useful in spotting trend reversals in the ongoing bull cycle.
First, whenever the Coinbase premium appeared, which means BTC is trading higher on Coinbase than on Binance, for example, BTC saw bullish momentum. Second, the momentum of Bitcoin strengthened when it saw large outflows from Coinbase.
In the past several days, however, neither of these two indicators have shown any staying power as the metric dipped into negative territory on Jan. 24.
BTC: Coinbase Premium Index (blue). Source: CryptoQuant
The combination of these two indicators would suggest that high-net-worth individuals are accumulating Bitcoin once again. Ki explained:
Besides the two Coinbase-related indicators, stablecoin inflows is another important metric that could spot a new rally brewing.
Ki noted that stablecoin inflows into exchanges are often a powerful on-chain signal for a rally because it shows the entry of sidelined capital into the cryptocurrency exchange market.
Stablecoin inflows. Source: CryptoQuant
For instance, when stablecoin inflows spiked on Jan. 22, BTC proceeded to rally by around 6% in the next 24 hours. He said:
A pseudonymous trader known as “CJ” shared a potential scenario where BTC could bottom at around $26,000 to $27,000.
Bitcoin price chart with key lines. Source: TradingView.com, CJ
However, even in the worst-case scenario, analysts generally do not see the price of Bitcoin declining to the low-$20,000 area. The trader wrote:
Bitcoin dropping back down to around $20,000, the previous all-time high, would mean a 35% drop from current levels. Such an event is unlikely, but traders should be aware of a possible black swan event such as a regulatory clampdown or a high-profile lawsuit against a major industry player.
Ki Young Ju, the CEO at CryptoQuant and an on-chain analyst, says Bitcoin (BTC) is neutral to short-term bearish for the time being.
There are two major indicators that have been useful in spotting trend reversals in the ongoing bull cycle.
First, whenever the Coinbase premium appeared, which means BTC is trading higher on Coinbase than on Binance, for example, BTC saw bullish momentum. Second, the momentum of Bitcoin strengthened when it saw large outflows from Coinbase.
In the past several days, however, neither of these two indicators have shown any staying power as the metric dipped into negative territory on Jan. 24.
When will Bitcoin market sentiment improve again?
Bitcoin will most likely find a renewed bullish rally if the premium on Coinbase consistently appears with large outflows.The combination of these two indicators would suggest that high-net-worth individuals are accumulating Bitcoin once again. Ki explained:
The popular narrative around the recent Bitcoin rally is that high-net-worth individuals and institutional investors are scooping up BTC on every dip.
Besides the two Coinbase-related indicators, stablecoin inflows is another important metric that could spot a new rally brewing.
Ki noted that stablecoin inflows into exchanges are often a powerful on-chain signal for a rally because it shows the entry of sidelined capital into the cryptocurrency exchange market.
For instance, when stablecoin inflows spiked on Jan. 22, BTC proceeded to rally by around 6% in the next 24 hours. He said:
How low would BTC go?
In the foreseeable future, if Bitcoin continues to trade sideways, some traders foresee BTC dropping to as low as $27,000.A pseudonymous trader known as “CJ” shared a potential scenario where BTC could bottom at around $26,000 to $27,000.
However, even in the worst-case scenario, analysts generally do not see the price of Bitcoin declining to the low-$20,000 area. The trader wrote:
Although short-term on-chain indicators signal a slightly bearish outlook, they do not hint at the likelihood of a deep correction.
Bitcoin dropping back down to around $20,000, the previous all-time high, would mean a 35% drop from current levels. Such an event is unlikely, but traders should be aware of a possible black swan event such as a regulatory clampdown or a high-profile lawsuit against a major industry player.