Understanding why the Bitcoin price appears to be stagnant recently
Introduction
The price of Bitcoin (BTC) has been consolidating within a roughly $8,200 range over the last seven days. Despite its all-time high of $99,655 on November 22, BTC’s price remains stuck between its resistance level at $99,700 and support at $91,600.
Demand for Bitcoin Investment Products Stalls
One of the primary reasons for this stagnation is the decrease in flows into BTC investment products. The Thanksgiving holiday in the United States also contributed to the decline in demand.
- Outflows from Bitcoin investment products totaled $457 million over the week ending November 29.
- Spot Bitcoin ETF balances have been relatively stable since November 25, despite both record inflows and outflows in November.
The chart below displays the Net Realized Profit/Loss metric used to assess the hourly change in on-chain capital flows for Bitcoin.
Net Realized Profit / Loss (USD)
At present, it can be seen that both profit and loss forces are largely equal, resulting in market equilibrium. This suggests that investors are neither accumulating nor selling BTC at a significant pace, leading to the consolidation of prices.
Bitcoin Stuck Between Two Trendlines
On December 2, Bitcoin’s price fell below the support provided by the 50-period simple moving average (SMA) at $95,821.
- However, BTC/USD found support at the 100 SMA, currently sitting at $95,051.
- Bitcoin’s price has now risen above the 50 SMA but needs to surpass the resistance at $98,200 to break out of the current consolidation pattern.
The chart below shows that Bitcoin’s price is pinned under a relatively stiff barrier within the $96,422 and $97,111 congestion area.
IOMAP Chart
According to data from IntoTheBlock, more than 733,760 addresses acquired approximately 597,620 BTC within this range. This indicates that there are significant buy orders in place, which could act as a resistance barrier for Bitcoin’s price.
On the downside, the 100 SMA at $95,051 is within the $92,876 and $95,736 buyer congestion zone. Roughly 688,690 addresses previously bought approximately 348,720 BTC in this zone, providing support for the bulls.
Conclusion
The demand for Bitcoin investment products has stalled, contributing to the stagnation of prices. The Net Realized Profit/Loss metric suggests that market equilibrium is maintained by equal profit and loss forces. Bitcoin’s price remains stuck between two trendlines, with resistance at $98,200 acting as a barrier to further gains.
Explore More Articles Like This
- Subscribe to the Markets Outlook newsletter to get critical insights to spot investment opportunities, mitigate risks, and refine your trading strategies.
- Delivered every Monday, this newsletter provides you with the latest market analysis and expert advice to help you make informed decisions.
Subscribe
By subscribing to the Markets Outlook newsletter, you agree to our Terms of Services and Privacy Policy. Stay ahead of the curve and get the insights you need to succeed in the cryptocurrency markets.
Subscribe now and start getting the critical insights you need to succeed in the cryptocurrency markets!
