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Bitcoin Displays Bearish On-Chain Signs While Analyst Call For A Decrease — What Will Happen Next For BTC?

Published June 28, 2024 3:12 PM
Nikola Lazic
Published June 28, 2024 3:12 PM

Key Takeaways

  • Active Bitcoin addresses reached a multi-year low.
  • Institutional capital drove Bitcoin’s recent price surge.
  • Analyst DonAlt predicted Bitcoin will fall below $60,000.

Some on-chain metrics for Bitcoin look grim, while others remain neutral. The sentiment is mixed, but one analyst calls for a bearish outlook. With this uncertainty ruling the market, what’s next for the price of BTC? 

Bitcoin Fundamentals 

According to on-chain data from IntoTheBlock, the ratio of active Bitcoin addresses has plummeted to its lowest level since November 2010. In June, the weekly active wallet ratio fell to 1.22%, peaking at 1.32%, matching the highest ratio in November 2010. The total number of active wallets also hit multi-year lows, with 614,770 active wallets recorded in May 27, the lowest since December 2018. This decline indicates holders’ lack of buying and selling activity, suggesting market consolidation.

BTC
Addresses stats | Source: IntoTheBlock

Juan Pellicer, a senior researcher at IntoTheBlock, attributes the decrease in Bitcoin wallet activity to weaker retail participation than in past cycles. He notes that institutional capital rather than retail investors drove this year’s run to a new all-time high. The broader economic situation also deterred retail investment in crypto. As investors brace for rising whale movements, including Mt. Gox trustee payments to creditors in July, larger holders, including governments, have been observed selling. Much of the bearish trading activity is occurring off-chain, which doesn’t significantly impact on-chain address activity statistics.

Bearish Sentiment 

A top cryptocurrency analyst and trader, known pseudonymously as DonAlt, has expressed a bearish outlook on Bitcoin (BTC) to the 60,500 Technical Roundup YouTube  channel subscribers. DonAlt believes Bitcoin will likely lose its key psychological support level and fall below $60,000. He predicts that if the range between $60,000 and $73,800 breaks to the downside, Bitcoin could experience at least 120 days of downward or sideways movement.

In the worst-case scenario, DonAlt anticipates a potential 35% drop from the current level, with Bitcoin possibly falling between $44,000 and $40,000. He suggests that the best-case scenario in a bearish trend would stabilize Bitcoin around $52,000. However, a weekly close above $63,000 would indicate a bullish setup, although DonAlt considers this outcome to have only a 10% chance. 

BTC Price Analysis 

After peaking at nearly $74,000, Bitcoin entered a descending channel. It broke out on May 17, climbing to $71,800 by May 21. Despite a fallback to $67,000 on May 31 and an attempt to regain momentum, it failed to surpass the $71,800 level again.

 

BTC
BTCUSD | Credit: Nikola Lazic/Tradingview

Following a second encounter with the $71,800 level on June 7, Bitcoin experienced a downturn. Moving forward, two possible scenarios emerge. First, the uptrend that started on May 1 could signal an impending major rally, potentially setting a new all-time high. If Bitcoin can bounce off the channel’s resistance and convert it into support, it may initiate the next bullish phase of a five-wave pattern, aiming to push past $78,000.

Alternatively, if Bitcoin falls back into the descending channel, it could signal a bearish trend. The recent rise might then be interpreted as a corrective three-wave pattern from its all-time high, suggesting Bitcoin is in a broad wave four correction, defined by WXY waves, with the recent lower high potentially marking the end of wave X. This scenario could lead to a decline towards $55,200. The outcome largely depends on how Bitcoin interacts with the channel’s resistance at the crucial 0.786 Fibonacci level of $62,500.

Disclaimer
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
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