Bitcoin’s (BTC) struggle continues, as the leading cryptocurrency faces relentless selling pressure, pushing it deeper into the red. After briefly sparking hope in late August, with the coin starting the month strong, sellers have since tightened their grip. Bitcoin’s price is now entrenched at the lower end of its recent consolidation, with crucial support zones nearing a critical point.
Key Support Zones Under Threat
From a technical perspective, Bitcoin is hovering around a precarious support range between $56,500—marking the lows of July—and $58,000, which was last seen in late August. Traders are now closely watching these levels to see if Bitcoin will hold or break lower, which could trigger another wave of selling pressure. On the daily chart, the once-promising uptrend has all but fizzled out, leaving investors bracing for what might come next.
As the price dips, the number of Bitcoin holders making a profit at spot rates is also shrinking. An on-chain analyst reports that approximately 25% fewer Bitcoin wallets are in profit, a troubling sign for the market. This reduction equates to nearly 5 million BTC held at a loss—a figure that’s five times the amount of Bitcoin held by its mysterious creator, Satoshi Nakamoto.
This sharp decline in profitable holdings adds fragility to the market. Analysts are closely watching whether the majority of these holdings belong to short-term or long-term holders. If short-term holders (STHs), typically speculators who bought within the last 155 days, are dominating, prices could fall further. These holders are prone to panic selling when prices decline, exacerbating the market’s struggles.
However, if most of the distressed holdings belong to long-term holders (LTHs), those who have held Bitcoin for more than six months, there may be hope. LTHs, including institutions and so-called HODLers, are less likely to sell during downturns, potentially providing stability and even laying the groundwork for a recovery toward $66,000.
Liquidity and Active Address Count Decline
Adding to the bearish sentiment, the Exchange Liquidity Ratio, which tracks liquidity across the Bitcoin market, has fallen below its 365-day moving average. This drop indicates that traders are hesitant to engage in the market amid the ongoing uncertainty. Liquidity typically rises in an uptrend but remains low during bearish trends, signaling that traders are waiting on the sidelines for a clearer direction.
This decrease in liquidity is accompanied by another worrying development: the number of active Bitcoin addresses has plummeted to its lowest level in 2024. This decline in active addresses signals waning investor interest, further dampening the market’s momentum and making a price recovery even more challenging.
What’s Next for Bitcoin?
Bitcoin’s next moves will largely depend on whether it can hold above its key support zones. If these levels fail, we could see further sell-offs and increased volatility in the near term. With falling liquidity and declining engagement from investors, Bitcoin’s path forward looks increasingly uncertain.
In the face of dwindling profits for holders and decreasing market participation, Bitcoin’s ability to weather this storm will be crucial in determining whether it can mount a recovery or continue its slide further into the red. For now, the market remains on edge, with traders and investors waiting for the next signal in what has been an unpredictable ride for Bitcoin.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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