Key Points
- Bitcoin has experienced a sharp decline, trading at $57736 after a 9.58% decrease in the past week.
- Despite this, analysts predict a new bull run due to historical consolidation cycles.
Bitcoin [BTC], the largest cryptocurrency by market capitalization, has seen a significant drop in recent weeks. The digital coin was trading at $57736 at the time of writing, following a 9.58% decline over the past week.
In August, the cryptocurrency market was extremely volatile. Bitcoin dropped to a local low of $49k before making a moderate recovery. Despite the recent slump, BTC is still 16.6% above its recent local low, showing signs of a declining yet bullish trend. It is also 59.94% above the yearly low of $38505 recorded earlier this year.
Analysts Predict Bull Run
These market indicators have led analysts to predict a new bull run. For example, well-known crypto analyst Mags predicts a new record high, based on historical cycles.
Mags’ analysis draws on the previous two cycles with monthly consolidation, which resulted in another bull run. He argues that after BTC hits a bottom and then a local top, a period of consolidation follows, which is then followed by a strong bull run.
Market Sentiment and Bitcoin’s Charts
Other indicators also suggest a bullish trend for Bitcoin. The long-term holder’s SOPR has averaged around one over the past seven days, indicating that the crypto is being sold at cost basis. This suggests market consolidation, with long-term holders neither making a profit nor suffering losses.
Moreover, the fund flow ratio has consistently been below 1 over the past seven days. This means that more BTC is being withdrawn from exchanges than deposited, indicating that investors are moving their crypto off exchanges for long-term holding.
Furthermore, BTC exchange inflow has decreased over the past three days, from a weekly high of 37899.7 to a low of 6869. This decline in exchange inflow indicates holding behavior, as investors anticipate higher prices.
Despite the recent decline, Bitcoin is in a declining but bullish consolidation. With increased market indecision, investors are turning to hold, thus reducing supply. This accumulation behavior leads to reduced supply and an increase in demand, which allows bulls to reclaim the markets. This could potentially lead to BTC breaking out above the $61159 resistance level, potentially towards $70k.
