Key Points
- Bitcoin’s drawdown in January post-halving is normal, with potential for a recovery to $130k in March.
- Decreases in Bitcoin inflows to exchanges and negative netflows indicate a stronger bullish conviction this cycle.
Bitcoin [BTC] has experienced difficulties in the last couple of months, especially in surpassing the psychological $100k-level. However, this is not unusual.
Historical Data and Market Trends
A post on X (formerly Twitter) suggests that BTC’s January drop following the halving is typical. If this pattern continues, we could see Bitcoin trading near $130k in March.
The movement of BTC into and out of centralized exchanges can also provide valuable insight into market behavior. Recent distribution by short-term holders is expected to decrease, potentially aiding a BTC recovery.
Bullish Signs for Bitcoin
The 30-day moving average of Bitcoin inflows to exchanges has been steadily decreasing since reaching a local high in early December. This decline is bringing the 30 DMA to the lows seen in October and June 2024.
Netflows, the difference between inflows and outflows, have also been decreasing. The 30 DMA here has been mostly negative since March 2024, with a brief period of positive flows in the second week of May.
Compared to past cycles, such a sustained period of negative netflows was not seen previously. This suggests a stronger bullish conviction in Bitcoin this cycle.
While this may not result in dramatic price gains, it could mean that long-term holders are less likely to panic during significant pullbacks. This could limit volatility and deep drawdowns that usually occur during a BTC bull run.
